The Naira’s value has dropped a lot in one year since Yemi Cardoso became the boss of the Central Bank of Nigeria (CBN).
Data from FMDQ shows that the Naira fell from N747.76 per $1 on September 22, 2023, to N1,541.52 per $1 on September 20, 2024. That’s a big drop of 51.49%.
Even though the CBN has been trying to keep the Naira steady, its value has still gone down a lot.
FX reserves rise by $4.12 billion
Nigeria’s foreign exchange (FX) reserves went up by 12% over the past year. They rose from $33.28 billion on September 22, 2023, to $37.39 billion on September 19, 2024. This is the highest level ever under President Bola Tinubu.
The increase of $4.12 billion in reserves shows the CBN is trying to keep enough money available in the market and handle shocks from outside the country.
But even with more reserves, the Naira still went down in value. It’s facing problems from inside and outside the country.
Yemi Cardoso, who started leading the CBN on September 22, 2023, has made new rules to control inflation, strengthen the Naira, and make the market fairer.
But these changes haven’t fixed everything. The Naira is still having a hard time.
While more FX reserves are good, there’s still a big gap between how much foreign money people need and how much there is. High prices and shaky confidence from investors also put pressure on the Naira.
Hike in interest rates
The CBN, led by Yemi Cardoso, raised the main interest rate four times to fight inflation and keep the economy stable.
First, the rate went from 18.75% to 22.75%. Then it increased to 24.75%, then to 26.25%. Most recently, in July 2024, the rate went up by another 0.50% to 26.75%.
These increases, adding up to 8 percentage points since Cardoso took over, are meant to control the country’s ongoing inflation problems, including high costs for everyday items.
The CBN’s committee members will meet on September 23 and 24, 2024, to decide whether to lower, keep, or raise the interest rate again.
Experts say the CBN should stop raising rates to help the economy recover. Professor Uche Uwaleke, an economist, advised the committee to hold off on more rate hikes because recent data shows inflation is slowing down, making a strong case for taking it easy on rate changes.
Newslodge reported that three committee members wanted to keep the rate at 26.25% during their July 2024 meeting.
Most members wanted a small rate increase to fight inflation, but three people, Lydia Shehu Jafiya, Murtala Sabo Sagagi, and Aloysius Uche Ordu, thought it would be better to leave it as it is to help the economy grow and stay balanced.
These three members made up about 27% of the 11-person committee.
Nigeria’s inflation went down for the first time in 19 months, to 33.40% in July, from 34.19% in June 2024. This was the first drop since December 2022, when the inflation rate was 21.34%.
The National Bureau of Statistics (NBS) also showed that inflation slowed to 32.15% in August 2024, down from 33.40% in July 2024. This is the second month in a row that inflation has gone down.
Experts rate Cardoso’s one year in office
Dr. Aliyu Ilias, an economist, told Newslodge on Sunday that Cardoso’s methods have been up and down and haven’t worked well yet.
He said, “The recent drop in inflation is too small. The harvest season helped bring it down.”
Rating the CBN governor, Ilias said, “He is focusing too much on reducing inflation and not enough on growth. I would give him a below-average score. He needs to do more and plan better.”
But, a financial analyst named Brian Essien from McBrain & Company said, “Cardoso hasn’t done too bad. He was given a weak economy.”
He added, “His goal was to target inflation, and we’ve seen two months of lower inflation, which is good.”
Essien also said the CBN should stop people from using dollars in daily life and focus more on making the Naira strong.
He stressed that the CBN needs to find creative ways to make the Naira more valuable, saying, “If not, the Naira will keep falling against the dollar, and there’s not much we can do about it.”
Essien recommended that the CBN’s committee should keep the interest rate at 26.75%, as changing it too much could make things worse.