As Foreign Exchange (FX) shortage continues in the market, the Nigerian currency, the Naira, has weakened further against the United States dollar to 436 on Thursday at the parallel market.
At the interbank official market, the local currency dropped to 313.07 on Thursday as against the 310.08 on Wednesday, down from 307.25 on Tuesday, according to data on the FMDQ OTC platform.
However, the major decline in the local currency against the greenback began a day after the Central Bank of Nigeria’s Monetary Policy Committee retained the benchmark lending rate at 14 percent.
Some foreign exchange analysts believe the decline in the value of the naira has nothing to do with the MPC decision to leave the lending rate unchanged.
They said the decline of the naira against the US currency would have been more significant if the MPC had announced a cut in the MPR on Tuesday.
“The developments in the official and parallel markets are a reflection of the usual pressure on the naira. It has nothing to do with the MPC’s decision to leave the interest rate unchanged. We would have seen a major decline in the naira if the committee had announced a rate cut,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.
“We can see that the dollar-naira exchange rate has been stable over time now. It is partly because the CBN has been able to meet its futures obligations. It has brought some relative calmness to the market. Again, the demand for forex by players in the oil and gas sector has been taken from the interbank market. This has also brought calmness to that market,” he added.
Meanwhile, the CBN said on Wednesday that interest rate cut alone would not help to pull the economy out of recession amid rising inflation.
The Director, Monetary Policy, CBN, Mr. Moses Tule, said policymakers would need to act together on fiscal, monetary and trade policies to jump-start economic growth.
He said Nigeria’s policy rate had been stuck at six per cent in the past but it didn’t spur credit growth, because the banking system did not respond to the move.