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Nigeria faults JP Morgan's index rating

Xinhua, January 21, 2015 Adjust font size:

Nigeria on Tuesday said it disagreed with the JP Morgan, a global financial firm, for putting the country's bonds on negative watch for three to five months.

Godwin Emefiele, the Governor of Central Bank of Nigeria (CBN), said this while addressing newsmen at the end of the Monetary Policy Meeting on Tuesday in Abuja.

"I have responded to this by saying that we disagree with this situation or assertion that the market is not liquid and It is important to note that first of all, reducing net open position from one to zero, did not mean that there was no trading," the apex bank chief told reporters.

According to him, there was intra day trading during those periods, noting that the apex bank insisted that the banks must close their positions to zero because of the volatility in the market during that period.

"On exchange rate, we thought that we could not let that continue because we discovered certain uncomfortable tendencies in the market which portend speculative attack on the currency and we are keenly monitoring the market," he said.

"That was the reason we took that decision; we were very clear when we say that the net open position was being reviewed by zero at that time in the interim," the bank official told reporters.

Emefiele said committee of governors had reviewed net open position upward to 0.1 percent after the activities of the market were reviewed on resumption of market in January.

He assured that the apex bank would continue to review the position, noting that the situation could be reviewed anytime.

The apex bank chief said it was their core mandate to defend the currency and its exchange rate.

He added that the bank had been monitoring and felt that the interbank will continue to support trading activities of both Nigerians and foreign investors.

He said that at any point it was observed that the market was unable to provide the liquidity that was needed, the CBN would intervene to provide the liquidity required.

The governor noted that the apex bank had the mandate to ensure that transactions taking place in the market were legitimate.

He said that what was paramount was that the external reserve was defended and the exchange rate policy be stabilized. Endi