By Paul Carsten and Camillus Eboh
ABUJA Jan 24 (Reuters) – Nigeria’s central bank held its benchmark interest rate at 14 percent for the third time in a row and signalled it will leave its currency exchange rate unchanged despite competition from the far cheaper black market.
The economy is struggling with its first recession in 25 years due low oil prices. Inflation, meanwhile, accelerated to a more than 11-year high of 18.55 percent in December.
Central Bank Governor Godwin Emefiele told reporters interest rate decision had been taken in light of headwinds facing the domestic economy and because of uncertainties in the global environment.
But he said the bank expected growth to turn positive this year while inflationary pressures would ease and the currency would stabilise.
The decision, which was taken unanimously by the monetary policy committee, matched the view of most economists polled by Reuters last week.
Emefile said the bank would continue to intervene in the foreign exchange market to keep the official exchange rate to the dollar in line with its “expectations”.
“No need for anyone to panic,” Emefiele said, when asked about the spread between official and black market rates, and hard currency shortages.
In June, the bank had said it would float the naira but has since then kept the rate at around 305 to the dollar, some 40 percent above the rate quoted on the parallel market – where importers head as they struggle to get dollars through official channels.
“For now, the only clear takeaway is that there are no imminent plans for further FX liberalisation,” said Razia Khan, chief economist Africa at Standard Chartered Bank. “FX will continue to be rationed.”
Cobus de Hart, senior economist at NKC in Johannesburg, said rising oil prices would not be enough to end the spread between the rates.
“The strategy of supplying priority sectors with additional U.S. dollars will not serve to narrow the gap between the official and parallel market rates,” he said.
The central bank also kept its cash reserve ratios for commercial banks at 22.5 percent. (Reporting by Ulf Laessing, Chijioke Ohocha, Paul Carsten, Oludare Mayowa and Camillus Eboh; Editing by Hugh Lawson)
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