Naira Depreciation Hits 53.19%
The Nigerian naira has lost over half its value in Yemi Cardoso’s first year as Governor of the Central Bank of Nigeria (CBN). According to data from the CBN, the naira closed at N1,597.478 per dollar on 23 September 2024, a 53.19% depreciation compared to the same period last year. This sharp decline has raised concerns over Nigeria’s economic stability and the effectiveness of Cardoso’s policies.
Cardoso’s Tenure and Economic Challenges
Cardoso was appointed by President Bola Tinubu on 15 September 2023 and officially confirmed on 23 September 2023. During his first year in office, the naira depreciated from N747.76/$1 to N1,597.478. The significant currency depreciation is tied to economic challenges that have persisted despite efforts to stabilise the naira and attract foreign investment through policy adjustments.
Tinubu’s Exchange Rate Unification Policy
Under Tinubu’s administration, Nigeria’s multiple exchange rates were unified in a bid to stabilise the naira. However, this policy has not attracted the anticipated foreign investment, leaving the naira under increased pressure. The CBN’s efforts to sell dollars at below-market rates also failed to prevent the currency’s further decline. Economists argue that this has contributed to worsening inflation and economic instability.
Rising Interest Rates and Inflation
Cardoso’s CBN has raised the Monetary Policy Rate (MPR) four times in response to the deteriorating currency value, bringing the rate to 26.75% in July 2024. Despite these efforts, inflation remains at record levels, with only a modest 2% drop reported in August 2024. Analysts are sceptical of Cardoso’s strategies, noting that further rate hikes could cause additional economic strain.
Experts Urge Caution on Further Rate Hikes
As the CBN’s Monetary Policy Committee (MPC) prepares to meet, experts like Professor Uche Uwaleke have warned against more rate hikes. They caution that further tightening of monetary policy may exacerbate economic challenges, including inflation and unemployment. With Nigeria’s economy already struggling, calls for a more consistent and sustainable approach are growing louder.
Cardoso Faces Criticism for Inconsistent Policies
Although Cardoso inherited a struggling economy, critics argue that his inconsistent policies have worsened the situation. The naira’s depreciation, coupled with rising inflation, has heightened the need for a review of economic strategies. The next steps taken by the CBN will be crucial in determining the future direction of Nigeria’s monetary policy and economic recovery.
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