{"id":290083,"date":"2011-03-05T02:01:00","date_gmt":"2011-03-05T02:01:00","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/03\/05\/we-will-defend-the-naira-against-wrong-economic-policies-%e2%80%94-sanusi\/"},"modified":"2011-03-05T02:01:00","modified_gmt":"2011-03-05T02:01:00","slug":"we-will-defend-the-naira-against-wrong-economic-policies-sanusi","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/03\/05\/we-will-defend-the-naira-against-wrong-economic-policies-sanusi\/","title":{"rendered":"We will defend the Naira against wrong economic policies \u2014 Sanusi"},"content":{"rendered":"
\n

The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, has risen stoutly to the defence of the naira. He said the Naira should not be a ‘whipping boy’ for wrong economic policies and should be put at its right position at all times.<\/span><\/p>\n

Sanusi said the bank will not let the naira depreciate as a stable exchange rate is the most effective tool for controlling inflation and that a weaker currency will not compensate for poor economic policies.<\/span><\/p>\n

“The exchange rate, to us, seems to be far more important for price stability than interest rates. With local farm produce, fuel and imported food making up more than 70 percent of the inflation index, borrowing costs have a limited impact on prices,” Sanusi told Bloomberg in London yesterday.<\/span><\/p>\n

The International Monetary Fund (IMF) had on February 17 hinted that the naira was overvalued and the central bank should allow more exchange rate flexibility. The currency has remained close to 150 to the dollar since it was devalued in December 2008, helping to keep inflation below 15 percent since January of the next year. The current inflation rate is 12.1 per cent from 11.8 last December.<\/span><\/p>\n

Sanusi said the CBN is “comfortable” with the current band in which the naira trades and that the apex bank is committed to keeping the currency within a range of three per cent above or below 150 per dollar.<\/span><\/p>\n

The foreign exchange dropped to almost $10 billion to $33.1 billion in the year through November 29 as the central bank propped up the currency and the government withdrew oil savings from its excess crude account. A weaker naira would push up inflation and fail to boost economic growth, Sanusi said.<\/span><\/p>\n

“If I devalue the naira by 20 or 30 percent, it wouldn’t make textile products in Nigeria cheaper than imports from China because it doesn’t fix the power problem or infrastructure problems. The exchange rate cannot continue to be the whipping boy and carry the burden of wrong economic policies,” Sanusi said.<\/span><\/p>\n

Meanwhile, Sanusi hinted that two of the eight rescued banks that benefitted from the N620 billion bailout funds have signed agreements to receive more capital, either through mergers or acquisitions, and four others are close to signing takeover agreements.<\/span><\/p>\n

“I can confirm that two banks have signed memorandums of understanding. I’m just not able to disclose their names because we do have an approval waiting from the Securities and Exchange Commission. One signed almost two weeks ago and one signed yesterday. We have two that are ready to sign in the next week or two and two others that are also close,” he said.<\/span><\/p>\n

The transactions are part of plans by the apex bank to recapitalise the banking system after the industry neared collapse following a debt crisis.<\/span><\/p>\n

Sanusi said while the banks have signed accords and four others are close to signing, agreements with another two lenders have been held up by “thorny issues”. The other two banks in financial trouble are “very tiny and frankly are not causing us too much concern”.<\/span><\/p>\n

Also, the Asset Management Corporation of Nigeria (AMCON), is seeking approval from the CBN to start the second phase of its programme to buy bad debts from banks, Chief Executive Officer Mustapha Chike-Obi said.<\/span><\/p>\n

AMCON had on December 31 signed debt purchase agreements with 21 of Nigeria’s 24 banks and issued N1.04 trillion ($6.8 billion) of consideration bonds that are not tradable to buy non-performing loans from them. Another N500 billion bonds are being set aside to take non-performing loans from N20 million and above the forthcoming second phase of the bond purchase.<\/span><\/p>\n<\/div>\n

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