Nigeria’s currency, the naira has further crashed to N734 to the dollar at the parallel market as the market reacted negatively to the Central Bank of Nigeria (CBN)’s decision to raise the Monetary Policy Rate (MPR) and Cash Reserve Requirement (CRR) to 15.5 per cent and 32.5 percent respectively.
The Naira had exchange for N733 to a dollar at the parallel market on Wednesday but moves by the apex bank to mop up excess liquidity in the system despite the CBN insisting that the MPC recent decisions will not stop the naira from further depreciation proved abortive.
The Director of Trade and Exchange Department, CBN, Dr. Ozoemena Nnaji, who spoke to newsmen during the post Monetary Policy Meeting (MPC)-facts behind the CBN’s decision which was held via zoom on Wednesday, noted that the apex bank is doing its best to ramp up its policy on increasing supply of FX in the system.
“As long as we keep increasing supply, we would continue to start seeing the narrowing of the gap. You also know that we have elections coming up and elections would require some kind of exchanges, but we are ramping up our supply and that’s what the Central bank is doing so that supply can go up and differential in rate will continue to narrow” Nnaji added.
However, the increasing strength of the dollar against the naira is having negative effect on Nigeria’s local currency. Parallel market operators are of the view that the fall was due to the dollar scarcity, which put pressure on the local currency.
According to Abdullahi Ismail, a trader, the CBN know what is happening to the economy yet decided to increase the interest rate, were they expecting the dollar to reduce? Because, what is obvious in the country today, is the scarcity of FX supply.