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The Central Bank of Nigeria (CBN) has warned bank customers, especially politicians, converting naira to dollar as electioneering campaign spendings increase.
The CBN, which also raised interest rate from 13 per cent to 14 per cent, said it was monitoring liquidity in the financial system.
Godwin Emefiele, the apex bank governor said this during the Monetary Policy Committee (MPC) meeting in Lagos.
According to Emefiele, the CBN would place a “Post no Debit” on the account(s) of any customer violating its rules.
“As far as we are concerned, we monitor liquidity in the subsystem. We will use our powers to mop us cash and for those taking money from banks to buy dollars. It is illegal to do so. If the security agencies hold you, you will know the implication of that.
“We are monitoring customers and banks, any banks involved will be sanctioned. We will place Post no Debit on the defaulting customer’s account. It is a very injurious tool to stop you from conducting illegal flows, either domestic or foreign currency.
“We will conduct investigations, and we will have proof and you will not be able to conduct transactions in any Nigerian bank,” he said.
The CBN governor added that the MPC increased the Monetary Policy Rate (MPR) benchmark interest rate from 13 to 14 per cent; retained the asymmetric corridor at +100/-700 basis points around the MPR; Cash Reserve Ratio (CRR) at 27.5 per cent; and Liquidity Ratio at 30 per cent.
He also noted that the rise in inflation was affecting the purchasing power of the people. adding that it was not peculiar to Nigeria.
Emefiele explained that inflation in several advanced economies pushed higher and further away from the long-run objectives of their central banks
He said the trend reflected the sustained increase in the price of food, energy, and other commodities due to the harsh combination of persisting supply chain disruptions and pent-up demand.
The CBN governor said the committee noted with concern, the persisting uptick in headline inflation (year-on-year) to 18.60 per cent in June 2022 from 17.71 per cent in May 2022, an 89-basis point increase in just one month.
The continued increase in inflation was driven by increases in both the core and food components to 15.75 and 20.60 per cent in June 2022.
“We take rising inflation very serious as it may retard growth. The US fed has increased rates four times. We cannot just continue to watch inflation, something must be done to rein in inflation. We conducted survey and felt that whereas we are seeing output growth, we need to rein in inflation
“As far as we see inflation rising, it must be dealt with. I want to assure you that MPC is determined that if inflation continues to rise, we will continue to tighten. We are looking at other measures, like supporting agriculture to see a moderation in food prices, but we cannot promise anybody that we will not continue to raise rates,” he said.
The MPC lauded the CBN’s concerted efforts toward ensuring exchange rate stability, noting the current difficulties associated with managing the stream of external shocks impacting the economy.
It said that exchange inflow through the RT200 FX Programme in the first quarter and second quarter had increased substantially to approximately $600 million as of June 2022. Members also noted the increase in diaspora remittances as a result of the Naira for Dollar incentive and urged the CBN not to relent in its efforts to encourage foreign exchange inflow to the economy.
(The Nation)
