Market News
Naira appreciates to N1,505/$1 as CBN retains interest rates - DAILY TRUST
By Sunday Michael Ogwu
The naira has sustained its strong performance as the local currency appreciated to close at N1,505/$1 at the parallel market on Thursday, gaining N9 from N1,514 it sold on Wednesday.
This is as the Central Bank of Nigeria (CBN) retained all monetary parameters at its 299th Monetary Policy Committee meeting, the first in 2025.
Addressing the media after the meeting, the CBN governor, Olayemi Cardoso said the committee was unanimous in its decision to hold all parameters and thus decided as follows: Retain the MPR at 27.50 per cent, retain the asymmetric corridor around the MPR at +500/-100 basis points, retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent and retain the Liquidity Ratio at 30.00 per cent.
The committee noted with satisfaction recent macroeconomic developments, which are expected to positively impact price dynamics in the near to medium term.
Cardoso cited the stability in the foreign exchange market with the resultant appreciation of the exchange rate and the gradual moderation in the price of Premium Motor Spirit (PMS).
He said members, however, were not oblivious of the risk of persisting inflationary pressures driven largely by food prices.
The committee highlighted the benefits of the improvements in the external sector to exchange rate stability, including the convergence of rates between the Nigeria Foreign Exchange Market (NFEM) and the Bureau de Change (BDC), and urged the bank not to relent in its effort to boost market liquidity.
Taming inflation and enabling growth
Reacting to questions around the effort to stimulate growth while taming inflation, Governor Cardoso said they are trade-offs.
“We can see that accretion to reserves has been consistent, and at one point in time, may I remind everybody that we achieved the highest level of reserves in the past three years. We also continued to see inflation gradually beginning to decelerate.
He argued that there’s greater confidence in the markets, which shows that the CBN is on the right course now.
He said: “Obviously, as that happens, we are in a better position to begin the process of moderating rates because stability is very important, and if investors do not see stability, they do not come to those markets.
“So our own objectives have been and will continue to be to achieve stability in the foreign exchange markets and the financial markets. That’s our objective. And as long as that happens, we are confident that we will begin to see more investments coming in, which should spur the badly needed growth.
“One other thing I would add to that is the fact that now currency is a lot more competitive, and with that competitiveness, we have seen an increasing interest from the international investors to want to come and invest in a country’s future.
…To bring inflation down to single digit
Cardoso said: “We will continue with the orthodox monetary policies that we have embarked upon. We have seen the outcome and are in a positive direction, and we will certainly stay that course. We will be vigilant. We will not take anything for granted.
“We believe that inflation has been too high for too long. So our objective in the medium to long term is to ensure that we are able to bring this down from the double-digit to the single.”
