… Naira Volatility Defies Forex Reserves Growth Of $39bn
The naira has crashed to N1,695 per dollar after the Central Bank of Nigeria (CBN) hiked the Monetary Policy Rate (MPR) by 50 basis points.
The apex bank at its 297th meeting raised the monetary policy rate to 27.75 per cent, ignoring experts’ warnings of its impact on the economy.
The CBN Governor, Olayemi Cardoso, said the interest rate raise would tame inflation and maintain foreign exchange stability.
Cardoso said, “The Committee also expressed optimism that the lifting of refined petroleum products from Dangote refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.
“This is also expected to moderate foreign exchange demand for importation of refined petroleum products, with a positive spillover on external reserve and improvement in the overall balance of payment position.”
Checks by NewsNGR show that the currency fell on the Bureau de Change segment of the Nigerian Foreign Exchange Market from N1,675 on Tuesday to N1,695 per dollar on Wednesday.
The currency also fell to N1,660.33 at the CBN weighted average on Tuesday, down from N,597.97 traded on Monday.
The development comes despite the CBN governor saying that the country’s reserves were up by 17.4 per cent to $39.07bn in September.
His words, “The external reserve stood at $39.07bn as of 19th September 2024 an increase of 17.4 per cent compared with $33.28bn in the corresponding period of 2023.
“This represents 8 months of import cover for goods and services and 13 months of imports of goods only.”
The Senior Partner and Economist at SPM Professionals, Dr. Paul Alaje, said CBN’s strategy of devaluing the naira to boost forex supply is ineffective.
Quoting Alaje, “Sadly, we are still adopting the same strategy, devalue and Hike Rates. They have been ineffective in the last 7 years.
“What must be done? Review the current FX policy, focus on supply side strategy.”