This reversal has put added pressure on the Central Bank of Nigeria (CBN) to consider further interest rate hikes.
By Johnson Atoukudu
The recent Bloomberg report highlights the downturn of the nation’s currency, the naira, which has transitioned from a period of gains to becoming the world’s worst-performing currency in the past month.
This reversal has put added pressure on the Central Bank of Nigeria (CBN) to consider further interest rate hikes.
The naira weakened to 1,466.31 against the dollar, its lowest level since March 20, attributed to a scarcity of US currency, with only $84 million available on Thursday. Despite previous praise from the CBN governor, Yemi Cardoso, for the naira’s performance in April 2024, challenges emerged in March, leading to a decline to as low as N1,600/$1 on the official market and N1800/$1 on the parallel market.
The report suggests that the upcoming policy meeting on May 21 may prompt the CBN to implement another rate hike, following previous increases of 600 basis points in February and March.
This strategy aimed to bolster the naira, which rebounded from a low of 1,627 naira on March 8 to 1,072 in mid-April, attracting investors seeking higher yields. The naira’s weakness was also evident in the unofficial market, where it depreciated by 0.9% to N1,468 against the dollar on Friday.
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