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New Naira Policy

The CBN head has announced a new Naira policy - the Naira will be redominized. The new plan essentially calls for the chopping off of 2 zeros from the currency. It is to go in to effect August 2008. The N100, N200, N500, and N1000 notes will be scrapped. N20 will now be the highest denomination. And the exchange rate will be adjusted so that N1.25 will now exchange for $1.
He explains that,

“According to him, they are designed to better anchor inflationary expectations, strengthen public confidence in the naira, make for easier conversion to other currencies, reverse tendency for currency substitution, eliminate lower value, reduce cost of production, among others.

Soludo said as necessary complements to the currency redenomination, the apex bank would embark on adoption of inflation targeting framework for the conduct of monetary policy and liberalised current account.”

I just hope that this is totally thought through before implemented. The debate over this new policy will be very interesting.

Here is a copy of Strategic Agenda for the Naira, the speech by Charles Soludo.

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