The Sunday Times FT report last week on the vehicle market crashing has prompted the authorities to take some action. On Wednesday the Central Bank (CB) said it was lifting a 100 % margin deposit requirement against Letters of Credit for the import of selected categories of motor vehicles with effect from that day (Apri l8).
“Such a margin was imposed on October 22, 2004 as a monetary policy measure in view of the expansion of money and credit aggregates, which caused pressure on the exchange rate and the balance of payments,” it said just four days after The Sunday Times FT in a report on April 5 said the car market had collapsed and sales had dropped sharply for a variety of reasons including the margin deposit requirement.
The CB said as a result of this and several other measures, the desired impact has already been achieved with reduced inflation and the deceleration of the monetary aggregates.
Accordingly, there is now no further need for such a policy in the framework for more relaxed monetary policy in the context of reduced inflation and more favourable inflation expectations outlook, it said. |
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