CBN May Announce New Exchange Rate Band Of N185-N220 In Q1 2016

The Central Bank of Nigeria, CBN, may announce a new exchange rate band, with a floor of N185 and a ceiling of N220 in the first quarter of 2016 in an effort to bring the external and domestic economic variable into equilibrium.

Some analysts have expressed optimism that the apex bank may unveil the new band when the Monetary Policy Committee (MPC) meets in two weeks, at a time when there are mixed signals on the direction of monetary policy in Nigeria.

Bismarck Rewane, chief executive officer, Financial Derivatives Company (FDC) said interest rate will likely respond to the new band.

Money market rates are already at an all-time low.

“We expect to see a creeping up of rates as the level of government borrowing increases”, he said.

The anticipated tweak in the exchange rate band is expected to slowdown the rate of depletion,of the external reserves, already below $29 billion, as the demand pressure eases.