Nigerian Economy Sees $1.5 Billion Boost Following CBN’s Aggressive Interest Rate Hike
Following a bold move by the Central Bank of Nigeria (CBN) to increase the Monetary Policy Rate (MPR) by 200 basis points, reaching a staggering 24.75%, the Nigerian economy experienced a significant influx of $1.5 billion within just a week. This decision, announced last Tuesday, appears to have ignited considerable interest from foreign investors, reflecting positively on the nation’s economic indicators.
Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications at the CBN, shared insights from Abuja, highlighting the positive trajectory of these developments. According to Mrs. Ali, the substantial financial inflow is a direct result of the Central Bank’s strategies aimed at stabilising the foreign exchange market. She further elaborated on the appreciating value of the Naira in the Autonomous Foreign Exchange market, which saw an improvement to N1,309/$1 from a previous rate of N1,611/$1 in the early weeks of March 2024.
The enhancement in the Naira’s valuation underscores the efficacy of the CBN’s policies under the stewardship of Governor Olayemi Cardoso. The commitment to market stability and the Naira’s pricing on the global stage remains unwavering, according to Mrs. Ali.
This monetary tightening came as the Monetary Policy Committee (MPC) decided to escalate its benchmark rate from 22.75% to 24.75%. The Governor, Mr. Olayemi Cardoso, during his briefing, emphasised the clearance of all verified foreign exchange backlogs by the CBN, a move anticipated to bolster liquidity in the foreign exchange market significantly.
Furthermore, the CBN’s recent conduct of the Nigerian Treasury Bills (NTBs) auction, which attracted N1.64 trillion across various tenors, demonstrated the market’s robust response to these policy adjustments. The auction, taking place on Wednesday, March 27, 2024, saw stop rates of 16.24%, 17%, and 21.124% for the 91-day, 182-day, and 364-day tenors respectively, indicating a heightened investor confidence in Nigeria’s economic stability.
These developments mark a turning point for the Nigerian economy, showcasing the potential benefits of decisive monetary policy adjustments. While the immediate impact appears promising, it brings to the forefront discussions on the sustainability of such financial inflows and the long-term stability of the Naira in the face of ongoing economic challenges.
Vanguard News
