The Naira has lost more than half of its value in the past year since Yemi Cardoso took office as the Governor of the Central Bank of Nigeria.
According to data from the FMDQ, the local currency fell from N747.76 to N1,541.52 against the dollar between September 22, 2023, and September 20, 2024, marking a 51.49% depreciation.
This significant decline has occurred despite the CBN’s ongoing efforts to stabilize the currency, which have included a notable increase in Nigeria’s foreign exchange reserves, according to Nairametrics.
Nigeria’s foreign exchange reserves increased by 12% over the past year, climbing from $33.28 billion on September 22, 2023, to $37.39 billion on September 19, 2024.
This marks the highest level of reserves under President Bola Tinubu’s administration.
The $4.12 billion increase reflects the Central Bank of Nigeria’s efforts to enhance liquidity in the forex market and mitigate external shocks.
Despite a 12% increase in Nigeria’s foreign exchange reserves, the naira continues to face significant depreciation due to external pressures and internal fiscal imbalances.
Cardoso, who became the CBN on September 22, 2023, has implemented several policies aimed at combating inflation, strengthening the local currency, and promoting market transparency.
However, these measures have yet to stabilize the naira in the face of ongoing economic challenges.
While the rise in foreign exchange reserves is a positive indicator for liquidity management, the widening gap between supply and demand in the forex market, coupled with high inflation and fluctuating investor confidence, continues to put significant pressure on the naira.
These challenges highlight the need for effective measures to stabilize the currency and restore market confidence.
Under Yemi Cardoso’s leadership, the CBN has raised the monetary policy rate four times to address inflation and promote economic stability.
The first hike elevated the rate from 18.75% to 22.75%, followed by an increase to 24.75%, then to 26.25%.
Most recently, in July 2024, the Monetary Policy Committee raised the rate by 50 basis points to 26.75%.
These measures reflect the CBN’s commitment to controlling inflation and stabilizing the economy.
Since Yemi Cardoso’s appointment, the CBN has increased the MPR by a total of 800 basis points, driven by the need to combat ongoing inflation challenges, including high core and food inflation.
The MPC is scheduled to meet on September 23 and 24, 2024, to discuss potential adjustments to the MPR, including the options of decreasing, retaining, or further increasing the rate.
Financial experts are advocating for a pause on interest rate increases 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 Monetary Policy Committee to refrain from further hikes, highlighting the importance of economic stability.
Uwaleke pointed to the recent moderation in inflation rates recorded in July and August as a strong justification for halting additional rate increases.
It was earlier reported that during the Central Bank of Nigeria’s Monetary Policy Committee meeting on July 22-23, 2024, at least three members voted to retain the MPR at 26.25%.
While the majority supported a moderate increase to address inflationary pressures, dissenting members Lydia Shehu Jafiya, Murtala Sabo Sagagi, and Aloysius Uche Ordu contended that maintaining the MPR at its previous level was more suitable given the current economic conditions.
