CBN Holds Interest Rate At 13 Per Cent

The Central Bank of Nigeria (CBN) held its benchmark interest rate unchanged at 13 percent on Tuesday, stressing the need to preserve foreign exchange reserves that have been depleted in recent months to support a weakening naira.

CBN Governor, Godwin Emefiele, said it was not possible for the regulator to intervene on a daily basis to supply banks with foreign exchange and support the naira.

Government revenues have shrunk sharply on lower oil prices and the naira has weakened drastically despite the bank spending billions of U.S. dollars to prop it up.

The Cash Reserve Requirement (CRR), the amount the central bank requires banks to set aside, was revised to 31 percent for both public and private sector deposits, Emefiele said.

Previously the CRR on private sector deposits was 20 percent and 75 percent for public sector deposits.

“The committee stressed the need for practical measures to restore the reserve buffer, safeguard the value of the currency and engender overall stability of the banking system,” Emefiele told a news conference.

“It was noted however, that monetary policy is gradually approaching the limits of tightening.”

Last week the national statistics office said Nigeria’s consumer inflation rose to 8.7 percent year-on-year in April, up 0.2 percentage points from March, marking the highest rate since July 2013.

“With the successful completion of the general election and the progress recorded in the fight against insurgency, the committee noted there is expected to be a reversal in the economic slowdown,” said Emefiele.