ONE of the members of the Central Bank of Nigeria Monetary Policy Committee, Doyin Salami has disassociated himself from the decision of the government not to devalue the naira despite the mounting economic pressures to do so.
Salami, a policy maker with the apex bank argued that currency restrictions are hurting the economy and fueling inflation, proposing that the naira should be devalued by 10 percent. National Daily gathered that Salami who lectures at the Lagos Business School had voted at the last MPC meeting in January to weaken the midpoint of the currency band to 220 per dollar from 197.
He was also said to have proposed the widening of exchange rate band to 5 per cent around the midpoint. “The central bank’s concentration on exchange-rate stability seems to have led to abandonment of its price stability/inflation objective,” Salami said.
“We are, unnecessarily, paying – in the form of eroding confidence, slowing growth and increasing joblessness of our population – a needlessly heavy price.”
However, with the backing of President Muhammadu Buhari, the Central Bank of Nigeria under Governor Godwin Emefiele has rejected calls to devalue the naira despite a plunge in oil prices that’s slashed revenue in Africa’s biggest crude producer. The bank has instead effectively banned imports of some goods and restricted foreign-currency supply, pegging the naira at 197 to 199 per dollar in the past year.
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That hasn’t stopped the black-market rate from soaring to about 320 against the dollar, adding to costs in the economy as businesses turn to the parallel market to access foreign currency. Inflation, which was unchanged at 9.6 percent in January, has been above the central bank’s target band of 6 percent to 9 percent since June.
According to the head of research at Afrinvest, Ayodeji Ebo, Salami is a lone voice among the 12-member committee, “The majority of the committee is expected to toe the line of the president. President Buhari’s persistent statements against devaluation will influence the MPC’s decision because of the way the committee is nominated.”