The naira plummeted to a record low against the dollar at the parallel market yesterday, trading at N737/$1 compared to N725 per dollar on Wednesday, traders said. The naira weakened significantly against the greenback two days after the Central Bank of Nigeria (CBN) hiked interest rate to 15.5per cent-the highest level in 20 yearsin a bid to check inflation and defend the local currency.
It also came less than 48 hours after political parties kicked off their campaigns for the 2023 general election. Data obtained from FMDQ website also shows that the naira fell slightly at the official market to N436.37/$1 on Wednesday, from the N436.33 it traded on Tuesday. Currency traders, however, attributed the naira’s depreciation against the dollar to the country’s lingering foreign exchange crisis which has seen demand for the dollar far outstripping supply at both the official and unofficial fx markets.
The CBN’s Monetary Policy Committee (MPC) had at the end of its meeting on Tuesday, justified its decision to hike the benchmark interest ratethe Monetary Policy Rate (MPR)- by 150bps to 15.5 per cent, on the need to rein in soaring inflation and to attract capital inflows that will boost its defence of the naira. New Telegraph had reported that analysts at FBNQuest Research, in their reaction to the outcome of the MPC meeting, predicted that the hike in the MPR to 15.5 per cent would not attract capital inflows.