The Central Bank of Nigeria has said that it recorded an inflow of over $1.5 bn into the economy over the past few days, indicating that its monetary policy efforts are working positively.
The bank’s acting Director, Corporate Communications Department, Mrs. Sidi Ali, made the assertions in a statement on Friday.
She noted that data available to the bank indicated that the inflow resulted from the bank’s effort to stabilise the foreign exchange market.
Ali said the naira has also continued to record gains in the Autonomous Foreign Exchange market as it traded at N1,309/$1 as against N1,611/$1 in the second week of March 2024.
The exchange rate between the naira and dollar closed at N1,534/$1 on the official NAFEM market on Monday, February 12, 2024. The current value of the naira shows a considerable appreciation.
Recently, the CBN held its 294th Monetary Policy Committee meeting where it decided to increase the interest rate by 200 points to 24.75 per cent from the previous 22.75 per cent.
During his post-meeting briefing, the CBN Governor, Olayemi Cardoso, also reiterated that the apex bank had cleared all verified foreign exchange backlogs, underscoring the fact that liquidity would improve in the forex market.
The bank conducted the Nigerian Treasury Bills auction of N1.64 trillion on Wednesday, at stop rates of 16.24 per cent, 17 per cent, and 21.124 per cent for the 91-day, 182-day, and 364-day tenors, respectively.
The decision to increase the interest rate raised lots of concern among citizens and economic experts but Cardoso said the bank’s decision was intended to stabilise the economy by bringing the interest rate at par with the current inflation in the country, stating that the increase would not be long.
“While the increase in interest rate may have tendencies toward strangulating the economy, with the foreign exchange rate coming down, that also helps to moderate it overall.
“And as I said earlier, you would expect that this would not be too long drawn; at least I would hope so. We are getting towards a situation where the exchange rate is moderating, and we are expecting it to moderate, and then it finds a level that, quite frankly, is sustainable. This would involve huge collaboration with the fiscal side because a lot of that cannot just rely on the monetary side alone,” the governor said.
While noting that Thursday’s rate signified that the Naira was headed in the right direction, Ali assured that the Cardoso-led CBN would remain committed to ensuring the stability of the market and the appropriate pricing of the Naira against other major currencies worldwide.