Foreign reserves: CBN not contemplating devaluation of currency, as Monetary Committee increases cash ratio from 22.5% to 27.5%

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Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, says the bank is not contemplating devaluation of currency following the drop in the country’s foreign reserves.
Emefiele stated this while fielding questions from journalists after the Monetary Policy Committee (MPC) first meeting in 2020 held in Abuja on Friday.
He said though, the drop in the Foreign Reserves was noticeable but the apex bank would not make any currency adjustments because of this development.
He noted that the current $38 billion foreign reserve was still high and strong to support the economy.
According to him, foreign reserve is there to meet the country’s obligation from time to time hence it will go up and sometimes come down.
“At reserve level of $38 billion and the current crude oil prices at above N57, N60 and sometimes N65 to N70 per barrel, we believe that we will be able to sustain the Foreign Exchange stability we have seen in the market.
“There is no need for anybody to think that adjustment of currency will happen.
“The CBN is able to meet all its obligations and the reserve is high and strong enough to meet obligations in the economy, therefore, thinking of devaluation of currency is uncalled for,” he said.
Emefiele disclosed that the MPC also looked at the debt to revenue ratio, saying that the debt level was not high but the committee emphasised the need to boost revenue.
He said that the MPC urged the government to find other ways to generate more revenues for the country.
The governor, however, agreed that the country’s debt to GDP was low and among the lowest in the world hence “we should not be carried away by this development”
He emphasised the need to do something to raise revenue to fund the country’s operations.
Meanwhile, the Monetary Policy Committee (MPC) has increased Cash Reserve Ratio (CRR) from 22.5 per cent to 27.5 per cent.
Emefiele made this known while briefing newsmen on the outcome of MPC meeting in Abuja on Friday.
Emefiele disclosed that all 11 members of the committee attended the meeting while nine of them voted for the increase of CRR.
He explained that the committee was confident that increasing the CRR this time would help to address monetary induced inflation.
He said it would assist in retaining the benefits from banks’ loan to deposit ratio which he said had been sustained for increased credit to private sector as well as pursuing market interest rates downward.
According to him, the MPC retained other parameters apart from the CRR.
He said the Monetary Policy Rate (MPR) was retained at 13.5 per cent and Liquidity Ratio at 30 per cent.
The governor stated that the committee also retained the Asymmetric Corridors at +200 and -500 basis points around the MPR.

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