CBN’s MPC meet over naira notes deadline, others

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The Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) commenced yesterday, the first of the year.

This will be the 289th meeting of the MPC and will be presided over by the CBN governor Godwin Emefiele after he returned to the country some days ago.

While the travails of the CBN governor with Department of State Securities (DSS) have dominated the headline, the issues remain and most will form the crux of discussion among MPC members in the two days meeting.

One subject of discussion during the meeting was the deadline date for the return of old naira notes.

Although, the CBN has consistently made its stance clear that the January 31, 2023 deadline which is just one week away will not be reversed the reality on the ground hints on a possible extension.

Most Nigerians are yet to completely accept the new notes, while others complain that they are yet to have a feel of the new notes, in fact, ATMs continue to dispense the old naira notes.

There has been real pressure from governors, statesmen, and groups on the CBN to extend the deadline, and that decision is likely to be reached today.

Another concern for CBN’s highest decision-making body is the interest rate.

In previous meetings, CBN increased the interest rates in its bid to drive down rising inflation.

For the first time in December, the inflation rate slowed to 21.3 percent.

Although prices continued to increase on monthly basis the ease recorded in December was the first in 10 months.

Fillers from experts and researchers at Cordros Securities was that the CBN will likely again increase interest rate during the meeting,

However, they noted MPC to favour smaller rate hikes in the short-term.

Naira is expected to again be the subject of discussion during the two days meeting.

In the last months, several policies have been introduced by the Central Bank of Nigeria to increase the value of the naira or even close the gap between the official market and the black market.

Nigerians are yet to feel the impact of the policies as Naira continued its poor performance from 2022 into 2023.

Ripples Nigeria Naira watch shows that at the official market, Naira is currently exchanged to the dollar at N461.50/$1 this is a massive drop when compared to the N422 which it was exchanged in January of 2022.

The black-market rate has also failed to recover as it remains at N748/$1 compared to just over N500 to a dollar it was one year ago.

The massive N287 gap between the naira and the dollar will be the subject of discussion during the meeting.

The federal government is expected to continue its borrowing spree in 2023.

Recent data shows that the CBN has become another shop for the federal government to get scarce funds and the dept is not above N22 trillion.

With questions from lawmakers, this is expected to be another subject of discussion on how lending to the government is expected to take shape in 2023.

CBN’s various interventions were discussed as also the impacts so far to the lives of Nigerians.

Farmers, and manufactures among others have been big beneficiaries of CBN intervention polices amid a high rate of defaults.

Also, the MPC members are expected to peruse CBN’s various interventions in the foreign exchange market and the sustainability of foreign reserves to meet forex demands.