CBN’s rate hike, Trump’s tariffs unchanged Naira’s fortune in the black market

FMDQ data showed the local currency strengthened to N1,659.44/$ on Tuesday from N1,675.62/$ on Monday.

The naira settled at N1,750/$ on Wednesday morning in the unofficial market in Nigeria’s major cities.

The CBN raised the Monetary Policy Rate to curb soaring inflation and enhance the naira’s stability.

The Monetary Policy Committee (MPC) unanimously increased the MPR by 25 basis points, from 27.25 per cent to 27.50 per cent. The Nigerian apex bank also kept the Cash Reserve Ratio (CRR) at 50 per cent for Deposit Money Banks and 16 per cent for Merchant Banks.

According to CBN chief Yemi Cardoso, the CBN has always prioritized preserving the naira’s stability. He emphasized the importance of creating an environment that is favorable for investment and economic planning.

“The Nigerian Central Bank exists to maintain stability,” he stated. “Stability facilitates economic planning. We make every effort to use all the resources at our disposal, which include several tools such as penalizing individuals who behave poorly, along with a variety of other measures to guarantee stability.”

The CBN governor claimed that the naira has remained stable since June 2024, despite pressure points from both domestic inflationary trends and international economic uncertainties.

The US dollar distorted the naira’s dynamics and the global currency market on Tuesday after President-elect Donald Trump announced on social media that his administration would impose a 25 per cent additional tariff on Canadian and Mexican imports, adding 10 per cent to the 60 per cent tariff on Chinese goods that he had already announced during his campaign.

Fed officials’ remarks also revealed disagreement among decision-makers regarding the pace of future rate reductions.

Despite some concerns about sticky inflation, the Fed’s November meeting minutes showed that members supported the gradual easing of interest rates.