“Henceforth monetary policy shall be to the benefit of all, not to the exclusive province of the powerful and the wealthy,” he affirmed while talking about the clean-up of the Central Bank of Nigeria (CBN), where a recent shake-up sacked the bank’s entire leadership.

Since assuming office, President Tinubu has implemented many reforms targeting one of the most comprehensive revamp of Nigeria’s foreign exchange system to date.

Apart from rejigging the CBN’s top hierarchy, he has introduced a series of measures to allow the official exchange rate of the naira to the dollar and other major currencies to weaken to a level that placed it close to the parallel market rate.

But that drive, even though crucial to attracting foreign investors, has brought more agony, as the gulf between the two rates, which closed up briefly in June, has widened further to the detriment of dollar users, particularly import-dependent manufacturers.

The official exchange rate, 461 to a dollar on the day of the president’s inauguration, stood at 776 at market close on Friday, meaning the naira has depreciated by 68.3 per cent in the past four months, making it Africa’s worst-performing currency as tracked by Bloomberg.

The gap between the official rate and the black market rate has widened by 29.4 per cent ever since the two attained convergence in June with the dollar exchanging for as high as 1004 on the street on Friday.

“Those who sought to perpetuate the fuel subsidy and broken foreign exchange policies are people who would build their family mansion in the middle of a swamp,” President Tinubu said.

The CBN under Godwin Emefiele, which he described as “a den of malfeasance,” ran multiple exchange rates that put the naira in danger of speculation and round-tripping, while also exposing it to other vulnerabilities.

Yemi Cardoso, the new central bank chief, has promised to run an evidence-based monetary system, sanitise the system and enforce discipline.

Nigeria is in a drive to clear an overhang of $6.8 billion obligations, which has spooked the naira, stifled activity in the foreign exchange market, and staunched the flow of the much-needed dollar supply the market needs to trade seamlessly.

The Central Bank of Nigeria has a duty to address that urgency immediately to regain confidence, Mr Cardoso told the Senate on Tuesday at his screening.

Afrexim Bank is engaging oil traders on behalf of the Nigerian government to finance a $3 billion loan that will help strengthen the naira.

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Adjusting the naira to the aforementioned rate, according to RenCap, would make the investor case about Nigeria more optimistic, even as they also recommended wide band around the naira in order to allow for “maximum flexibility.”

They argued that it would be a shame if Nigeria’s central bank move its currency rate slightly at its monetary policy committee (MPC) meeting this month and then do so again when pressure resurfaces again in three to six months’ time.

Analysts at RenCap revealed that after their meetings with Nigeria’s policy makers in Abuja in May 2015, they believed that a currency shift to around N230-240/$ with perhaps 5-10 percent bands on either side was both appropriate and in the back of the minds of the Central Bank of Nigeria (CBN), when the present government was sworn-in place, and the fiscal outlook was clarified.

“But since May 2015 the oil price has plunged further. The unofficial market rate is now 266/$. Our Real Effective Exchange Rate (REER) model – which we have our doubts about (we never accept one model as providing a universal “truth”) – suggests NGN305/$ is fair-value for the currency.

“And yet oil prices are below the long-term average so maybe the naira should be weaker than fair value too. The South African Rand is 30 per cent cheaper than its long-term value and that makes some sense when commodity prices have been flushed down the toilet.

“I would definitely take a fresh look at Nigeria if the currency is moved to 240-250/$ with perhaps 5-10% bands on either side, but I would favour wider bands, giving Nigeria more flexibility to cope with an oil price that has been highly volatile.

“It would be a shame if Nigeria moved the currency rate now – and then came under more pressure in 3-6 months to do it again. It would be a shame if new currency bands had as their weakest point, alevel which is only just touching the current unofficial rate of NGN266/$. Far better if there is some flexibility in the system,” they stated.

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Emefiele said policy would be aimed at seeking a reduction in overall lending rates to make it cheaper to invest, although he didn’t give a time frame for doing so, leaving it open for him to hold off until the monetary conditions allow it.

Interest rates have been stuck at 12 percent since late 2011, and several measures have been made to tighten liquidity, which has been credited with gradually bringing inflation down, but businesses complain that lending rates are too punitive.

“We shall pursue a gradual reduction in interest rates,” he said, adding that “A comparison of selected macro-economic aggregates from some emerging market countries, including South Africa, Brazil, India, China, Turkey and Malaysia indicate that Nigeria has one of the highest Treasury Bill rates.

“Such high rates create preserved incentives for commercial banks to simply buy virtually risk-free government bonds rather than lend to real sector.”

He said that to enhance financial access and reduce the cost of borrowing credit, there was the need to pursue policies targeted at making Nigeria’s Treasury Bill rate more comparative to other emerging markets.

Emefiele said that while reduction in both deposit rates would encourage investment attitude in savers, a reduction in lending rates would make credit cheaper for potential investors.

“The bank will also begin to include unemployment rates as one of the key variables considered for its monetary policy decisions.

“In the interim, we will continue to maintain a monetary policy stance, reflecting the liquidity conditions in the economy as well as the potential fiscal expansion in the run-up to the 2015 general elections,” he said.

On the exchange rate policy, he said the key goal would be to maintain exchange rate stability in view of the high import dependent nature of the economy and the significant exchange rate it passed through in recent years.

According to him, a systematic depreciation of the Naira would literarily translate to considerable inflationary pressure with attendant effect on macro-economic stability.

“Therefore, under my leadership, the bank will continue to focus on maintaining exchange rate stability and preserve the value of the domestic currency.

“We will sustain the managed float regime in the management of the exchange rate as this will allow the bank to intervene when necessary to offset pressure on the exchange rate.

“To support this strategy, we will strive to build-up and maintain a healthy external reserve position and ensure external balance,” Emefiele said.

The new CBN governor explained that there was no doubt that reducing the interest rate and maintaining the exchange rate was a daunting twin goal.

“In this pursuit, the bank will work with all stakeholders to device measures to ensure the goals are achieved.”

On Financial System Stability, he said the bank would continue to sustain the effective management of the potential threats and avoid systemic crisis.

“The core of my vision is to effectively manage potential threats to financial stability and create a strong governance regime that is conducive for financial intermediation, innovative finance and inclusiveness.

“In this regard, we hope to anchor on two pillars of management factors that create liquidity shocks and zero tolerance on practice that undermine the health of financial institutions,’’ he said.

To achieve the goal, Emefiele said the bank would work with stakeholders to aggressively shore up the reserve and also engage both the fiscal and political authorities.

He assured Nigerians of enhanced banking supervisory purview over the banking system and strengthening of risk-based supervision mechanism to ensure overall health and banking system stability.

Emefiele said he would create a Central Bank that is professional, apolitical, people focused and a bank that would dissipate its energies on building a resilient financial system to serve growth and development needs of Nigerians.

Meanwhile, the treasury bills fell 20 basis points across the board on Thursday to an average of 11.3 percent after his remarks, as buyers snapped up bonds.

Nigeria’s benchmark 10-year bond yield was trading flat on Thursday at 12.52 percent, after initially falling 7 basis points on the new central bank governor’s remarks that he would seek to cut interest rates. The 3-year bond yield was down 16 basis points to 11.71 percent.

The core of his vision was zero tolerance to practices that undermine financial stability, he said at his first press conference since taking over on Tuesday from Lamido Sanusi, whom President Goodluck Jonathan suspended in February.

But he gave few details of how exactly that would be enforced. Nigeria suffered a severe financial crisis in 2008 that nearly collapsed nine banks, and Sanusi stepped in with a bail out package and had some of the chief executives sacked.

“Although Emefiele’s comments were qualified with the statement that it is a ‘daunting’ task to achieve the twin goals of reducing interest rates while maintaining FX rates, the very fact that lower interest rates were mentioned sends a strong signal to the markets,” said Standard Chartered’s Razia Khan.

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Emefiele, who was confirmed by the Senate after being screened for about two hours also unfolded his plans on how to grow the economy, stressing that the CBN under his watch will adopt development banking model.

During the confirmation hearing, on Wednesday, Senate President, David Mark, gave a stern warning to senators who were in the habit of hobnobbing with nominees before screening and confirmation to desist from it to protect the sanctity of the Senate.

The Senate had explained that the reason behind the confirmation of the CBN Governor before the expiration of the incumbent governor was to ensure that there was no lacuna.

While fielding questions from senators at the Committee of the Whole, the CBN governor- designate said he would probe into the various expenditure components of the bank to know how exactly the deficit became inevitable.

He said, “I will look into the budget expenditure components in the CBN but I am aware that we have what is called the operational expenditure profile as well as administrative expenditure profile.

“I think and I suspect that more of the deficit would have come from areas that pertain to operational expenditure and if it is about operational expenditure, it means that unfortunately, we cannot do anything about it.

“This is because those were the expenditures that were incurred in the course of open market operation which is needed to ensure that we maintain a strong currency and ensure that we continue to have a good country.”

On the issue of high target to bank staff, he stated that there was nothing wrong with the target even as he said that in any establishment, there was always a target which he said always led to promotion, though he was silent on the issue of immorality that the target normally leads to especially among the female staff.

He also promised to look into the dollarization of the Nigerian economy as his prime duty as one of the core mandates of the CBN was to maintain the legal tender, adding that continuous dollarization of the economy would create problems in the economy.

“On the issue of dollarization of the Naira, I think one of the core mandates of the CBN is to ensure that we maintain a legal tender and respect it and ensure that whatever is done, our Naira has to be used as a legal tender.

“I will take it as a primary responsibility to ensure that the attempt to dollarize the Nigerian economy is discouraged. We should not allow it because it will create problems for the economy.”

He, however, assured the Senate and Nigerians at large that if approved, his own regime as the CBN governor would not spend any money in contravention of the law.

Emefiele noted that “The core mandate of the CBN is to achieve monetary and price stability, ensure strong exchange rate and build foreign reserves. We will ensure that we have a sound financial system in Nigeria.

“We will work hard to achieve macro economic stability in the country where inflation rate will continue to come down. We will also ensure that the interest rate will continue to come down.

During my tenure, whatever monetary policy decisions we take will be those that will lead to the improvement in the level of employment in Nigeria because employment is very crucial to national development.

“Today we have an employment emergency in the country and we must ensure that whatever decision we take at the CBN will be those that will lead to improvement in the level of employment in Nigeria.

“We will work with the manufacturing companies to ensure that we improve on their level of production and by extension, ensure that we achieve economic growth and development in Nigeria.

“The CBN and all stakeholders in the economy will play a central role towards ensuring that we grow the Nigerian economy in a stable environment. We will do this through the adoption of the development banking model that had been tried and tested in different jurisdictions in the world.

“In fact, in some of the frontiers and emerging markets in the world, we have seen development banking used as a tool towards achieving economic growth and development and industrialisation. In the Latin America countries of Brazil and Mexico, development banking was used for their economic growth and development.”

On the issue of the cashless economy introduced by Sanusi Lamido Sanusi, Emefiele said that “The cashless policy is one that we consider very good and important because all nations of the world today are embracing electronic banking as an electronic channel for doing business.

“Nigeria being a very important country in the comity of nations should also embrace the cashless regime. We are going to look at part of the policy that has to do with penalty being imposed on excess withdrawals.

“We will review it to ensure that we mop up all the cash which are outside into the banking system notwithstanding the limit but we will encourage people to make sure that they embrace the electronic form of doing business.

“Then we could say that when making withdrawals, you should pay something to encourage you to embrace the electronic form of doing system. We will look into that and make it better.”

Also speaking on devaluation of the currency, he said, “it is true that we have seen the reserves dropping, it is as a result of speculative attack on the naira because people think that there will be devaluation as a result of what is happening in the world today.

“There is no need for anybody to worry about devaluation because it is a very devastating action to be taken in the country particularly because we are an import-dependent country. Devaluation will hurt the economy. We have an economy that is still very strong with about $39bn in foreign reserve to sustain about nine months of import. For as long as we have crude prices standing at about $100 per barrel, it is a strong economy.

“So, if we allow devaluation to happen, it will hurt the economy. Because we are import dependent, if we allow devaluation, many people will lose their jobs, prices of goods and services will go up, productive capacity will come down and eventually lead to inflation.

“The policy being adopted now which allows us to hold on to exchange rates and ensure that we do not engage in devaluation should be continued.”

He also described AMCON as a child of circumstance, stressing, “it came about as a result of the financial crisis to clear toxic assets in the books of some banks and to address the plights of those who lost investment in the capital market. “If the agency was not established, some of the banks would have been liquidated today and the customers would have lost their deposits.”

On the exchange rate, we will continue to ensure that we have a strong exchange rate. “What the CBN is doing now is to use various instruments of currency policy to ensure that we control the exchange rate. Actually, the exchange rate that the CBN has is N155 to one dollar. We have the unofficial markets but the CBN usually intervenes from time to time to bridge the gap between the official and un official market.”

Emefiele equally promised a cordial relationship between the apex bank and the Ministry of Finance towards ensuring economic growth. He said, “the Central Bank of Nigeria is the monitoring authority whereas the Ministry of Finance is the fiscal authority. It is important that in their relationship they must work in one direction.

“They must push in one direction. If we push in opposite directions what you will find is that we are not going to be able to achieve economic growth and development that we are talking about. It is important that both the Ministry of Finance and the Central Bank move in one direction. If the decision is that we should pursue a conventional policy, both the Central Bank and the Ministry of Finance should be seen to move in one direction.”

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