Stabilizing FX more important than interest rates in Nigeria, Analyst advises CBN 

He made this assertion during Episode 8 of Naijaonpoint TV’s flagship show, Drinks and Mics, co-hosted by Ugo Obi-Chukwu, CEO of Naijaonpoint, and Arnold Dublin Green of Cordos Capital.

“Interest rate is a form of price. Exchange rate is a form of price. Now, as a policymaker, you have a choice as to which price you want to adjust or focus on. Within the context of Nigeria and the impact of what it means for the people who are creating output, FX is so much more important than interest rate,” Esemuede stated.

Esemuede’s comments come against the backdrop of the recent Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), where the benchmark Monetary Policy Rate (MPR) was retained at 27.50%.

“For me, the priority is let’s have exchange rate stability,” Esemuede emphasized, adding that improving Nigeria’s non-oil export revenues is a key step toward solving the nation’s foreign exchange (FX) challenges.”

Arnold Dublin Green of Cordos Capital also weighed in on the discussion, suggesting that recent movements in the naira’s value might not be solely due to CBN interventions.

“It might not only be a CBN intervention [that stabilized the naira], it might be a global play on the naira,” he said.

His remarks align with the recent statements by CBN Governor Olayemi Cardoso, who, while announcing the MPC decision, noted that the Committee was pleased with recent macroeconomic developments.

At this meeting, the Monetary Policy Committee noted with satisfaction, recent macroeconomic developments which are expected to positively impact the price dynamics in the near to medium term,” Cardoso said.

Cardoso further highlighted that the stability in the FX market has led to an appreciation of the naira and a moderation in the price of Premium Motor Spirit (PMS). However, he acknowledged that inflationary pressures persist, particularly in food prices.

“Members, however, were not oblivious of the persisting inflationary pressures, driven largely by food prices. The Committee noted the recent rebasing of the commodity price index (CPI) by the National Bureau of Statistics (NBS), which reviewed the weights of items to reflect current consumption,” he added.

The National Bureau of Statistics (NBS) adjusted the methodology for calculating inflation, leading to a sharp drop from 34.80% recorded in December 2024 under the previous system.

According to the latest report by the NBS, urban inflation was 26.09%, while rural inflation stood at 22.15%, reflecting changes in the method used to measure price movements in the economy.