Sections
Poll: UK military offer
Do you support UK's military assistance as a way of fighting militancy and smuggling in Niger Delta?
‘Late year disbursement triggered spending extravaganza’
Font size:
Bismark Rewane
Bismark Rewane , chief executive, Financial Derivatives Company Limited say late year disbursements in 2007 helped to trigger a spending spree across states and the Central Bank’s, (CBN), plan to make state monthly allocations in dollar denomination will alter the structure of the market.
His views were given at the monthly economic news and views he presented at the Lagos Business School (LBS) February executive breakfast meeting.
“Payment of dollar to states will help give further support to the naira in the short - term.”
Meanwhile, activity in Wholesale Dutch Auction System (WDAS), he said was lower than corresponding period of 2007.
“CBN has so far offered $480 million as against $700 million in the first eight auctions of last year. Amount sold is $369.4 million, 34.5 percent lower than $823.4 million in 2007.”
The average official exchange rate of naira to dollar which was N116.97/$ showed 3.3 percent appreciation over comparable period of last year.
The WDAS demand remained high but CBN has cut supply drastically. The forex market is now being funded by a combination of oil companies, State governments and Diaspora investment flows.
On inflation targeting, Rewane noted that the CBN will adopt explicit and fully fledged inflation targeting as its basic monetary policy framework.
CBN, he said, is likely to use a domestic monetary anchor of anticipated inflation.
CBN, Rewane said expects that by tracking and pursuing price stability in the short to medium term, economic agents will make efficient resource allocation decisions.
And he noted that there is evidence to show that most inflation targeting regimes are robust enough to defend economy from fiscal shocks and dominance.
It can be recalled that CBN plans to harmonize financial year ends of banks to December 31. This move is supposed to reduce balance sheet cosmetics and make comparative and static analysis easier.
“Payment of dollar to states will help give further support to the naira in the short - term.”
Meanwhile, activity in Wholesale Dutch Auction System (WDAS), he said was lower than corresponding period of 2007.
“CBN has so far offered $480 million as against $700 million in the first eight auctions of last year. Amount sold is $369.4 million, 34.5 percent lower than $823.4 million in 2007.”
The average official exchange rate of naira to dollar which was N116.97/$ showed 3.3 percent appreciation over comparable period of last year.
The WDAS demand remained high but CBN has cut supply drastically. The forex market is now being funded by a combination of oil companies, State governments and Diaspora investment flows.
On inflation targeting, Rewane noted that the CBN will adopt explicit and fully fledged inflation targeting as its basic monetary policy framework.
CBN, he said, is likely to use a domestic monetary anchor of anticipated inflation.
CBN, Rewane said expects that by tracking and pursuing price stability in the short to medium term, economic agents will make efficient resource allocation decisions.
And he noted that there is evidence to show that most inflation targeting regimes are robust enough to defend economy from fiscal shocks and dominance.
It can be recalled that CBN plans to harmonize financial year ends of banks to December 31. This move is supposed to reduce balance sheet cosmetics and make comparative and static analysis easier.
Add to:
del.icio.us |
Digg
del.icio.us |
Digg
Email to a friend
Print version
Plain textRate this article
Comments ( posted):
Post your comment