CBN to resist pressure to devalue Naira

The Central Bank of Nigeria (CBN) will repel any pressure to devalue the naira since it retains ample funds to defend the currency.

The CBN spokesman, Mr. Ugochukwu Okoroafor, said that the institution remained committed to this objective adding that, 'we have the resources to meet demand. We are still determined to keep within that band.'

However, the naira has fallen in recent months, trading outside the central bank's target band of N150-N160 to the United States dollar since June, initially due to foreign investors booking profits on their naira assets, and on importers buying dollars.

But, the CBN Deputy Governor, Mr. Kingsley Moghalu,  said there were no plans to change the band in an interview in London on Tuesday.

'We are comfortable with the band as it is currently - we do not have any intention of doing anything spectacular,' he said.

But a similar naira weakness, partly caused by excessive spending prior to 2011 national elections, forced the central bank to lower the target band from N145-N155 to the dollar in November that year, after months of struggling to prop it up.

The unit has hovered around the N162-N163 level in recent months, on strong demand for dollars. It touched a 20-month low of N163.70 to the dollar last week.

It closed at N163.10 to the dollar on Monday after it became clear the central bank would not intervene again to prop it up. By 0910 GMT on Tuesday it had rebounded to 162.90.

Nigeria's consumer inflation ticked up to 8.7 per cent in July, though Moghalu said he expected it to stay in the single digits this year.

The CBN Governor, Mr. Lamido Sanusi, has repeatedly warned that excessive election spending poses an inflation risk that he is ready to counter with tight monetary policy.