CBN raises banks' cash reserves to preserve Naira's value
The Central Bank of Nigeria (CBN) has raised the Cash Reserve Ratio (CRR) - which sets the amount of liquid assets that banks must keep at all times - from 50 per cent to 75 per cent.The Central Bank of Nigeria (CBN) has raised the Cash Reserve Ratio (CRR) - which sets the amount of liquid assets that banks must keep at all times - from 50 per cent to 75 per cent.
The measure, which further tightens monetary policy, was announced on Wednesday (January 22nd) by Governor Mallam Sanusi Lamido Sanusi.
Expressing concern over the continued depletion of the Excess Crude Account, he said the action was necessary to save the
naira from further
in value, Vanguard reports.
"This absence of fiscal buffers increased our reliance on portfolio flows thus, constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price," he said.
The Governor also noted that reserves had fallen to $42.85 billion (€30.9 billion), which represents a 2.23 per cent decrease over December 2012, and urged the "fiscal authorities to block revenue leakages and rebuild fiscal savings needed to sustain confidence and preserve the value of the naira.