The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has brushed aside the claim of Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso that FAAC disbursement results in significant pressures in the FX market.
Mr. Edun addressed this concern while taking questions from journalists during the ongoing World Bank/IMF summit in Washington D.C. on the statements by the CBN Governor on FAAC disbursements resulting in the depreciation of the Naira.
According to Edun, the problem will Nigeria’s foreign exchange market is supply and as an oil-producing nation, Nigeria could address that by significantly increasing her oil production output.
He said, “The key about the foreign exchange market really is supply and as you know we are an oil-producing country, we just need to get our oil production up and that will deal with that issue of foreign exchange supply and pressure on foreign exchange anytime there are large flows.”
While speaking on having a single-digit interest rate, Mr. Edun noted that for now, the CBN will continue monetary policy tightening until inflation is defeated and noted that Western economies could drop MPR because they have successfully defeated inflation.
Recall that at the last Monetary Policy Committee (MPC) meeting, the Governor of the CBN, Mr. Yemi Cardoso who doubles as the MPC Chairman stated that members of the MPC had noticed a correlation between the period of FAAC disbursement and demand pressures in the foreign exchange market.
According to him, the apex bank will monitor future FAAC allocation disbursement to determine the impact on the FX market.
He stated, “Furthermore, members observed a strong correlation between FAAC releases and liquidity levels in the banking system as well as its impacts on the exchange rates.”
“The committee therefore agreed to increase monitoring of future releases with a view to addressing its effects on price development.”
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