Governor of the Central Bank of Nigeria (CBN) ,Mallam Sanusi Lamido, Wednesday reassured forex dealers that the apex bank will continue to meet the rising need or foreign currency, describing the pressure observed in the market as “temporary.”

The regulator partly hinged the jump in demand for the greenback on investors’ fears that violence between religious and ethnic groups may disrupt elections.

The CBN has been defending the naira, keeping it within a range of between 3 percent above or below N150 per dollar, in a bid to curb inflation in the country. That policy has led the apex bank to deplete its foreign currency reserves, raising concern at the International Monetary Fund (IMF), which recently called for more exchange-rate flexibility.

Sanusi who gave this assurance in an interview with Bloomberg said: “So long as we are comfortable with the coverage given by the reserve position of the country we will pursue a stable exchange rate policy. If we see an elevation in demand, that in our judgment is temporary, we will meet that demand. Nothing has changed fundamentally as far as the economy is concerned. But people want to see a smooth transition, a free and fair election before they bring back the money.”

The naira has weakened across various segment of the forex markets as demand pressure persists. Although the regulator was yet to release figures for yesterday’s trading at the Wholesale Dutch Auction System (WDAS), Monday’s trade saw an increased demand despite the fact that the regulator stepped up its supply of the greenback.

“With an African country like Nigeria going into elections, where people are talking about ethnicity and religion, you get people trying to get out, to buy dollars and hedge their risks. That puts pressure on the exchange rate and foreign currency reserves.”

According to Sanusi, with import costs accounting for about 70 percent of the consumer price index, keeping the naira stable is crucial to fight inflation.

He stressed that while the bank is concerned about the impact of rising government spending, oil and food costs on inflation, the short- term impact of raising interest rates is “questionable.”

He added: “I have no doubt in my mind that sustained expansion in money supply and low interest rates for a long time would be inflationary. But the extent to which a short- term movement in rates and monetary aggregates would affect inflation in the short term is more questionable.”