The naira has taken a sharp dive against the dollar in both the official and black markets, following the Central Bank of Nigeria’s (CBN) fifth interest rate hike to 27.25 percent.
Data from the Financial Markets Dealers Quotations (FMDQ) on Tuesday showed the naira trading at N1658.48 per dollar, marking a significant depreciation from the N1562.66 it traded at the previous day. This represents a staggering N95.82 decline within 24 hours.
Similarly, the black market saw the naira drop by N10 to close at N1675 per dollar on Tuesday, compared to N1665 per dollar on Monday.
The decline in the naira’s value occurred despite a notable rise in foreign exchange turnover, which increased to $166.36 million on Tuesday, up from $100.21 million traded the day before.
The CBN’s Monetary Policy Committee (MPC) decision to raise the monetary policy rate (MPR) to 27.25 percent was part of efforts to tackle inflation, but the move appears to have had limited immediate effect in stabilizing the naira, which has been under sustained pressure amid Nigeria’s economic challenges.
Analysts predict further volatility in the foreign exchange market as businesses and investors continue to react to the interest rate hike and broader economic conditions.