The Central Bank of Nigeria’s (CBN’s) Monetary Policy Committee (MPC) on Tuesday raised Monetary Policy Rate (MPR) 200 basis points from 12 percent to 14 percent, Cash Reserve Ratio (CRR) was retained at 22.5 percent and Liquidity ratio at 30 percent, while the Asymmetric Window was also retained at +200 and -500 basis points around the MPR
Godwin Emefiele, governor of the CBN said this is to support the weak naira and attract more investments.
The naira is facing a tough time in the global forex market and has been plunging with limited dollar supply; making the CBN to hike interest rates to attract investment.
Emefiele said at the MPC meeting, five out of eight members choose a rate increase, “we took a lot of time to deliberate on whether to favour growth against inflation. Members were of the view that an upward adjustment of interest rates would strongly signal not only the bank’s commitment to prize stability… but also its desire to gradually achieve positive real interest rates,” the CBN governor said.
The naira on Tuesday in the interbank market – had depreciated against the three currencies tracked by Cordros research. The Nigeria’s local currency traded against the greenback, pounds sterling and euro at N310.50, N407.70 and N341.11 respectively.
Also in the parallel market, the naira depreciated 1.89 percent, 1.66 percent, and 1.98 percent compared to the dollar, pounds sterling and euro to trade at N377.00, N490.00 and N413.00 apiece.
