Trends Towards Maintaining Price Stability

Trends Towards Maintaining Price Stability By Dr Kenny Odugbemi

Depreciation of Naira necessitates banks to hold excess long foreign currency
CBN has now address Net position of the limit on foreign currency assets and liabilities by setting NoP limit at the maximum amount for single and total exposure for all classes of assets
Hence banks that hold currency either short or long term will now be exposed to the risk of foreign exchange rate charges

CBN has gazetted at assets and liabilities not exceeding
Short term-20%
Long-term-0% for long share holders fund to curb the growth of foreign currency exposure for banks

Caution

To avoid losses due to material systemic challenges, banks are to bring their exposure with set limits and also have foreign contingency funding arrangements with other institutions,sort for approval of Eurobond where redemption clauses applies

In addition, banks are to remit their debit of of currency transaction Fy 2021 2023 to the government

Key developments
Headline inflation YoY-29.9% Jan 2024
Food inflation-35.41%
Core inflation-23.59%

Fy 2024 project GDP
Q3 2023-3.46%
CBN-3.38%
FGN-3.88%
IMF-3%
External reserve-$34.5bn Feb-2024
MPR-22.75%
Cash reserve ratio-45%
Retain liquidity-30%

Conclusion

Iincrease in MPR, will hit businesses hard as inflation rises, hence the need to slay inflation dragon before it consume our economy

Advice
Three tiers of government
Public and Private sectors
Citizenship across the board

We all need to play pivotal role in the process of strengthening our Economy