Over $1.5 billion has entered the Nigerian economy in recent days.
The Central Bank of Nigeria (CBN) claims that this shows the effectiveness of its monetary policy initiatives.
Hakama Ali, the Acting Director of the Bank’s Corporate Communications Department, made these claims in a statement on Friday.
According to data that the bank had access to, Ali pointed out that the inflows were the outcome of a coordinated attempt to calm the foreign exchange market.
As of the second week of March 2024, the naira was trading at N1,309/$1, up from N1,611/$1 in the Autonomous Foreign Exchange market, according to her.
According to Ali, the rate on Thursday showed that the naira was moving in the correct way.
She gave her word that the CBN, under the leadership of Yemi Cardoso, was still dedicated to maintaining market stability and setting the naira’s exchange rate appropriately versus other major global currencies.
This follows the Monetary Policy Committee (MPC) of the CBN’s announcement on March 26, 2024, of a two-percent hike in its benchmark rate, from 22.75 to 24.75 percent.
During his post-meeting briefing, Governor Olayemi Cardoso reaffirmed that the CBN had cleared all verified foreign exchange backlogs, highlighting the fact that the foreign exchange market will see an improvement in liquidity.
The Nigerian Treasury Bills (NTBs) auction of N1.64 trillion was held by the Bank on March 27, 2024, with stop rates of 16.24%, 17%, and 21.14% for the 91-day, 182-day, and 364-day tenors, respectively.
Both the general public and economic specialists expressed great anxiety over the move to boost the interest rate.
Cardoso countered that the bank’s move to align the interest rate with the nation’s current inflation rate was meant to stabilise the economy.
“While the increase in interest rates may have tendencies towards strangling the economy, the decline in the foreign exchange rate also helps to moderate it overall,” stated the governor.
And like I mentioned before, you would think that this wouldn’t take too long—at least, that’s what I would hope. The exchange rate is starting to stabilise, as we had anticipated, and eventually it will reach a level that is, quite simply, sustainable.
“A lot of stuff cannot just rely on the financial side alone, so there would need to be a lot of cooperation with the fiscal side.”