Nigeria CBN hikes cash reserves for private deposits, holds MPR at 12 pct

CBN acting governor, Alade

The Central Bank of Nigeria (CBN) held its Monetary Policy Rate (MPR) at 12 percent for the 15th time, but hiked Cash Reserves Requirement (CRR) on private sector deposits with banks to 15 percent from 12 percent previously.
Acting governor, Sarah Alade, said at the end of Monetary Policy Committee (MPC) meeting in Abuja on Tuesday said majority of members voted for further tightening of liquidity to support the naira.
The MPC also, retained the 200 basis points corridor around the MPR as part of measures to sustain the present monetary stance.
However, the 300 basis points hike in private sector deposits is seen a major leap to further tighten available liquidity in the money market and curb speculations on the local currency.
The naira has been trading around 164-165 to the U.S. dollar over the past three weeks, supported by direct central bank interventions and dollar sales by some oil firms.
The Tuesday's meeting was the first gathering of the monetary policy committee since President Jonathan suspended Lamido Sanusi as governor, a monetary-policy hawk, and this raised the tempo of expectations from both local and foreign investors.
However, some analysts had said devaluation of the naira at this time, despite the huge pressure is not politically correct as crucial election is at the corner.
“The devaluation of the naira is not on the table for now,” Alade said in answer to some question at the MPC briefing.
Razia Khan, the head of global research at the south Africa based Standard Chartered Bank actually predicted the hike in private sector CRR to 15 percent.
"It is also possible that the CBN may tighten the private-sector CRR to 15 percent from its current 12 percent", Razia Khan had said in an early research notes to clients.