The International Monetary Fund (IMF) has observed that Nigeria’s currency, the naira, is showing signs of stability because of smart decisions in monetary policy. In a report about global financial stability, presented at a press event in Washington DC, the IMF said this improvement is due to higher interest rates and the Central Bank of Nigeria’s (CBN) work in reducing delays in foreign exchange transactions.
Under Governor Olayemi Cardoso’s leadership, the CBN has raised interest rates several times to fight inflation. The latest increase was 50 basis points, bringing the rate to 27.25% on September 24. Although some groups, like the Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI), disagreed with this move, the IMF recognized the CBN’s efforts to manage inflation and stabilise the foreign exchange market.
Tobias Adrian, who leads the IMF’s work on financial matters and Director of monetary and capital markets, backed the CBN’s move to focus on controlling inflation and allowing more freedom in exchange rates. The IMF noticed that the CBN’s action of clearing $7 billion in overdue payments for foreign exchange helped to stabilise the naira.
The CBN’s actions have made investors more confident, leading to a big increase in foreign exchange coming into Nigeria. In just one year, the amount of foreign exchange entering Nigeria jumped by 57%, reaching $8.86 billion in February 2024.
