CENTRAL BANK OF NIGERIA COMMUNIQUE NO. 60 OF THE
MONETARY POLICY COMMITTEE, JANUARY 14th , 2009
The Monetary Policy Committee (MPC) of the Central Bank of
Nigeria (CBN) met today, January 14, 2009, and reviewed the
developments in the foreign exchange market vis a vis Nigeria’s
external reserves position and macro economic developments.
It noted that the preliminary estimate of the GDP growth rate for the
end of 2008 was an impressive 6.8% compared with 6.2% in 2007. It
also noted that inflationary pressure remained high throughout the
year and provisional figures indicate that the end December
headline inflation was 14.6% while estimated core (non-food)
Inflation rate was at 9.2%.
It also reviewed the developments in the oil market as well as capital
flows into the economy in 2008 and the prospects for 2009. MPC also
reviewed the recent developments in the foreign exchange market
and the depreciation of the naira in the light of decreased supply of
foreign exchange vis a vis increased demand. It noted the
uncertainties and the speculative pressures in the foreign exchange
market.
The MPC noted that while it is desirable to allow the exchange rate
to adjust in response to market conditions, the CBN remains
determined to restore stability to the market.
Consequently, the MPC decided as follows:
1. In the meantime, the CBN is reintroducing the Retail Dutch
Auction System (RDAS), with effect from Monday, January 19,
2009, and will be conducted on Mondays and Wednesdays.
We will revert to WDAS at the appropriate time.

2. Bids for the purchase of foreign exchange under the RDAS must
be cash-backed at the time of the bid.
3. Funds purchased from CBN at the Auction shall be used for
eligible transactions only, subject to stipulated documentation
requirements. Such fund shall NOT be transferable in the interbank foreign exchange market.
4. Authorised Dealers shall return to the CBN any unutilised funds
within five (5) business days after delivery, at the rate of
purchase.
5. Purchases by banks on behalf of their customers will be
published in the dailies fortnightly.
6. Interest earned on Letters of Credit established and for which
settlement has not been effected, shall be repatriated to the
CBN for repurchase at the bid rate at the time the funds were
purchased.
7. The foreign exchange Net Open Position (NOP) of banks will be
reduced from 10% to 5% with effect from Monday, January 19,
2009.
8. CBN remains committed to Section 15 (4), of the Foreign
Exchange (Monitoring and Miscellaneous Provisions) Act of
1995, which guarantees unconditional transferability of funds in
respect of loans, and portfolio and foreign direct investments
into Nigeria.


Prof. Chukwuma C. Soludo, CFR,
Governor, Central Bank of Nigeria,
Abuja,
January 14, 2009