The Central Bank of Nigeria has official announced a new monetary policy,Tuesday.
CBN said this was necessary to guarantee more flexibility in the management of the foreign exchange market, to avoid an “imminent recession” of the economy.
The Governor of CBN Goodwin Emefiele, who made the announcement at the end of the Monetary Policy Committee meeting in Abuja on Tuesday, said details of the new policy would be released in the coming days.
He said the new policy would guarantee improved access to foreign exchange for business to boost the economy
He said the Monetary Policy Committee of the Central Bank of Nigeria has directed the management of the apex bank to adopt a flexible exchange rate policy.
He stressed that with the directive, the apex bank would within the next few days release a new guideline on the management of foreign exchange in the country.
A flexible exchange rate system is a monetary system that allows the exchange rate to be determined by supply and demand.
The implication of this is that with a high demand for the dollar in Nigeria, there is every likelihood that the Naira would experienced further decline.
The bank had been under pressure over the last few months to either devalue the Naira or adopt a flexible exchange rate policy.
Emefiele said following the recent depreciation in the country’s foreign exchange, time has now come for the bank to introduce greater flexibility in the management of foreign exchange.
He said while the country awaits the new policy to be unveiled soon, the bank would only fund critical transactions such as importation of vital machinery for production as well as essential basic raw materials that are critical for manufacturing which by their nature cannot be sourced locally.