The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday bowed to pressure by devaluing the naira from N155 to N168 to the US dollar.
CBN Governor, Mr. Godwin Emefiele
The MPC tightened the apex bank’s monetary policy by allowing some flexibility in the exchange rate to stem speculative activities and depletion of reserves.
The announcement was made by the CBN Governor, Mr. Godwin Emefiele, while briefing journalists shortly after the MPC meeting at the bank’s headquarters in Abuja.
The bank also increased the Monetary Policy Rate from 12 per cent to 13 per cent.
The MPR is the anchor rate at which the CBN, in performing its role as lender of last resort, lends to Deposit Money Banks to boost liquidity in the banking system.
By this increase of 100 basis points in MPR, the cost of funds to the banking system from the apex bank has now increased thus, leading to an increase in lending rate from commercial banks to businesses.