Nigerians Are Now Motivated Than Ever To Hold Local Currency – CBN
This was said by CBN Governor Olayemi Cardoso during a press conference on Tuesday following the 297th Monetary Policy Committee (MPC) meeting in Abuja.
Cardoso declared that the committee had decided to tighten the 32.15% inflation rate by raising the Monetary Policy Rate (MPR), which measures interest rates, by an additional 50 basis points from 26.75% to 27.25%.
In September 2023, President Bola Tinubu named Cardoso as the head of the CBN following the unfortunate events involving Godwin Emefiele.
The Senate swiftly confirmed Cardoso’s appointment. The interest rate was increased by 8.5% by the MPC under Cardoso in the past year, from 18.75% in September 2023 to 27.25% a year later.
The value of the naira under Cardoso has increased from approximately N700/$1 in September 2023 to N1600/ $1
When asked if the central bank’s monetary policies—which include many interest rate increases and the closing of foreign exchange windows—are effective in light of the difficult economic circumstances that Nigerians are experiencing, the governor of the Central Bank of Nigeria (CBN) pointed the finger at the actions of his predecessor.
“Between 2017 and 2023, we entered a very loose money supply scenario and saw the infusion of liquidity into the system.
“The money supply was approximately N19 trillion in 2015 and N54 trillion in 2023. That is an enormous growth, a tremendous increase.
And then a significant portion of that was accomplished by means and techniques.
In other words, the creation of money essentially led to an enormous amount of money pursuing a comparable quantity of things.”
I believe having that context is crucial. Remember, this was a scenario in which people were starting to lose faith in the currency and the exchange rate was moving at an astounding rate.”
In contrast to the past, when this was not the case, Cardoso stated, “We believe that these multiple rate hikes have helped people to now begin to take a different look at their currency and there is a greater incentive to hold the naira.”
“We have no choice but to deploy these tools to rein in the excess liquidity in the system, the high inflation, and encourage portfolio investors who had taken flight to come back and take interest in Nigeria, tough though they may, and I accept that they may be tough,” he continued.
References and Citation
channelstv.com – Rate Hikes: Nigerians Now Have Greater Incentive To Hold Naira, Says CBN
newswatchplus.ng – Nigerians now have greater incentive to hold naira – CBN
thecable.ng – Cardoso: Multiple interest rate hikes have helped to restore confidence
lindaikejiblog.com – Multiple interest rate hikes has restored confidence in Naira – Cardoso
