Rewane: Naira Depreciation From N746 To Over N1,700 per Dollar Fuels High Inflation

Rewane who was responding to questions on recent hike of interest rates to 27.5 per cent by the Central Bank of Nigeria (CBN), said the exchange rate is taking a toll on inflation.

According to him, “In January 2023 it was N746 to a dollar, but it has fallen all the way to over N1,700 to the dollar.”

Rewane noted that the naira has depreciated 31 per cent in eight months but in the whole year 47 per cent while at the same time, the prices of petrol have gone up by 54 per cent.

While acknowledging that the CBN monetary policy tightening measures are yielding results, though minute, he said under Cardoso, as the CBN governor and his team, between October last year and November this year, they have hiked rates six times, cumulatively they have increased the interest rate by 8.75 per cent.

“The impact of this is that inflation has increased more slowly by 6.55 per cent, it could have been higher,” he said.

He said this is the smallest rate hike in 16 months and the monetary policy tightening cycle is coming to an end assuming that inflation can be tamed.

To shore up the value of the naira, he recommends that Nigeria should have a combination of stable interest rates, increase output, and build confidence in investors.

“It is not just about borrowing money but how do we use the borrowed money, is it being used efficiently or are we just borrowing for leakages?” he said.

“Nigeria has to confront the fact that we have no credibility and people do not believe what we say because they see what we are doing.”