The Naira has lost over half of its value in one year since Yemi Cardoso assumed office as the Governor of the Central Bank of Nigeria (CBN), with the local currency dropping from N747.76/$1 on September 22, 2023, to N1,541.52/$1 as of September 20, 2024. This decline in the value of the naira has occurred amid efforts by the CBN to stabilize the currency, including a notable increase in Nigeria’s foreign exchange (forex) reserves. Despite the increase in forex reserves, the growth has not been sufficient to curb the sharp depreciation of the naira, which continues to struggle under external pressures and internal fiscal imbalances.
The CBN, under Yemi Cardoso, increased the monetary policy rate (MPR) four times to combat inflation and foster economic stability. The first hike increased the rate from 18.75% to 22.75%, the second to 24.75%, the third to 26.25%, and most recently, in July 2024, the Monetary Policy Committee (MPC) raised the rate by 50 basis points to 26.75%. These increases, totaling 800 basis points since Cardoso’s appointment, have been driven by efforts to tackle the country’s persistent inflation challenges, which include high core and food inflation.
Financial experts have called for a pause on interest rate hikes to stabilize Nigeria’s struggling economy. A financial economist and Director at the Institute of Capital Market Studies, Nasarawa State University Keffi, Professor Uche Uwaleke, urged the MPC to refrain from increasing interest rates, citing the need to stabilize the economy. Uwaleke emphasized that the recent moderation in inflation, recorded in July and August, provides a compelling case for halting further rate hikes.
Nigeria’s inflation rate dropped for the first time in 19 months, at 33.40% in July, down from 34.19% in June 2024. This marked the first decline in the headline inflation rate since December 2022, when it last dropped to 21.34%. Also, data released by the National Bureau of Statistics (NBS) revealed that Nigeria’s headline inflation rate eased to 32.15% in August 2024 down from the 33.40% recorded in July 2024, reflecting a decrease of 1.25%-points
