A remarkable $1.5 billion inflow was recorded within a week subsequent to the Central Bank of Nigeria (CBN) raising the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent on Tuesday.
Mrs. Hakama Sidi Ali, the Bank’s Acting Director of Corporate Communications Department, disclosed this development in Abuja yesterday, highlighting it as an indication that the CBN’s monetary policy efforts were yielding positive results. She emphasized that the influx of funds was a direct outcome of the Bank’s concerted efforts to stabilize the foreign exchange market.
The data available to the Bank pointed to a notable improvement as the Naira continued to make gains in the Autonomous Foreign Exchange market, trading at N1,309/$1, compared to N1,611/$1 in the second week of March 2024. This recent surge in the value of the Naira signals a positive trajectory, reinforcing the confidence in the nation’s currency.
Mrs. Hakama Sidi Ali reiterated the commitment of the Cardoso-led CBN to ensuring the stability of the market and appropriate pricing of the Naira against other major currencies worldwide. She emphasized that Thursday’s exchange rate was indicative of the Naira’s progress in the right direction, offering reassurance to stakeholders and investors alike.
The decision to hike the benchmark rate by two percent, announced by the CBN’s Monetary Policy Committee (MPC), underscored the Bank’s proactive approach in addressing economic challenges. Governor Olayemi Cardoso, during his post-meeting briefing, reaffirmed the CBN’s success in clearing all verified foreign exchange backlog, which is expected to enhance liquidity in the foreign exchange market.
Furthermore, the CBN conducted the Nigerian Treasury Bills (NTBs) auction of N1.64 trillion on Wednesday, March 27, 2024, at stop rates of 16.24%, 17%, and 21.124% for the 91-day, 182-day, and 364-day tenors, respectively. This move reflects the Bank’s strategic efforts to manage liquidity and regulate interest rates in the financial system.
The notable increase in foreign exchange inflows following the MPR hike indicates a vote of confidence from investors and stakeholders in the Nigerian economy. It reflects positively on the effectiveness of the CBN’s monetary policy measures in addressing prevailing economic challenges and fostering stability.
Analysts anticipate that the influx of funds will stimulate economic activities, boost investor confidence, and support the ongoing efforts to revitalize key sectors of the economy. The appreciation of the Naira in the foreign exchange market further strengthens the country’s position in the global financial landscape.
As the CBN remains steadfast in its commitment to maintaining market stability and promoting sustainable economic growth, stakeholders are optimistic about the prospects of Nigeria’s economy in the coming months. The recent developments serve as a testament to the resilience and adaptability of the nation’s financial system amidst evolving global dynamics.
