• Thu. Mar 30th, 2023

    Old Naira notes: CBN insists on January 31 deadline; raises lending rate to 17.5%


    Jan 24, 2023

    By Bassey Udo

    Amid calls by lawmakers in the National Assembly for the extension of the deadline for old naira banknotes to remain as legal tender, the Central Bank of Nigeria (CBN) on Tuesday insisted it has no plans to shift the January 31, 2023 deadline.

    Both the Senate and the House of Representatives have passed resolutions calling for the apex bank to extend by six months the deadline for the old notes to continue in circulation till July 31, 2023.

    Other groups that have expressed concerns over the crisis in the financial system as a result of the Naira redesign policy of the CBN include the Nigerian Governors Forum, and the Bank Customers Association of Nigeria.

    But the CBN governor, Godwin Emefiele, said at the end of the February meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja that there was not plan for any shift

    “I don’t have good news for those who want a shift in the deadline for the old naira to be changed because we will not move it,” Emefiele said in response to a reporter’s question on the issue.

    “People are holding and vaulting the Naira in their houses and they don’t have the license to do that, because they use it to speculate on the Naira,” he added.

    The CBN, he said, has so far mopped up about N1.5 trillion from the currency swap policy, adding that there was hope that the N2 trillion target would be met before the deadline.

    He said the CBN has pleaded with the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) not to harass anybody over the matter.

    The CBN governor was speaking shortly after the Monetary Policy Committee of the Bank voted to raise the benchmark monetary policy rate by 100 basis points, from 16.5 to 17.5 percent.

    Presenting the communiqué of the first MPC meeting of the year to the media, Emefiele said while the CBN would keep the asymmetric corridor at +100/-700 basis points around the MPR, the cash reserve ratio (CRR) would be retained at 32.5 percent and the liquidity ratio at 30 percent.

    This is the fifth time the CBN would increase the interest rate despite criticisms from manufacturers and some key stakeholders who decry the negative impact on inflation and cost of doing business.

    But shading some light why the apex bank took the decision to raise the lending rate, Emefiele said a review of the CBN decision previously to increase the rate showed they were beginning to yield positive results, with the slight drop in the inflation rate reported by the National Bureau of Statistics in its latest inflation data for December 2022.

    He said there was a need for the CBN to keep tightening its fiscal policy stance to continue to stabilise the financial system and other fundamentals.

    Earlier last year, the apex bank increased the MPR from 11.5 percent to 16.5 per cent across four consecutive rate hikes in 2022.

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