The Emir of Kano, Alhaji Muhammadu Sanusi II and former governor of the Central Bank of Nigeria (CBN) has said that the CBN has to devalue the naira and loosen monetary policy to stimulate the country’s economy hit by a drop in oil prices.

Sanusi, criticising CBN’s currency policy on Friday, told CNBC television, “It is wrong to think that you can keep the naira at a certain level when the price of oil is falling without depleting your reserves”, saying, “It does not speak well of us to pretend that the naira is appropriately priced.”

It would be recalled that Godwin Emefiele, the apex bank governor, has ruled out another naira devaluation, saying repeatedly that the currency was “appropriately” priced despite a sharp fall of oil revenues whacking public finances.

Sanusi also criticised foreign currency restrictions imposed by the central bank, which have frustrated local firms struggling to get dollars.

He also said interest rates were too high. The central bank let the main benchmark rate unchanged at 13 percent at its last monetary policy meeting in September while cutting the banks’ cash reserve ratio to 25 percent from 31 percent.

“It’s time to loosen monetary policy. We need to lower interest rates otherwise we compound an exchange rate crisis for businesses with high borrowing costs and declining demand,” Sanusi said. (Reuters)