• Tuesday, June 18, 2024
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Naira closes flat at official market after CBN raises rate

CBN bans street trading as naira falls under fresh pressure

The naira on Wednesday closed flat against the dollar at the official foreign exchange (FX) market, a day after the Central Bank of Nigeria (CBN) increased Its benchmark interest rate by 150 basis points to 26.25 percent.

After trading on Wednesday, the naira gained marginally by 0.21 percent as the dollar was quoted at N1,462.59, stronger than N1,465.68 quoted on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data from the FMDQ Securities Exchange Limited.

What this means is that if naira stabilises Imported goods may become cheaper since the purchasing power of the naira increases. This can lead to lower prices for products that Nigeria imports.

It also means that investors find the Nigerian currency more attractive due to the higher returns on investments. This can lead to increased foreign investment, lower inflationary pressures, and potentially stronger economic growth, benefiting consumers and businesses alike, said a financial market analyst.

Read also: CBN’s interest rate hike will slow economic growth – Analysts

The FX market summary released by the FMDQ showed that the intraday high closed at N1,531 per dollar on Wednesday, stronger than N1,549/$1 closed on Tuesday. The intraday low closed steady at N1,401/$1 on the spot trading.

Dollar supplied by willing buyers and willing sellers declined by 53.96 percent to $123.45 million on Wednesday from $268.17 million recorded on Tuesday.

The naira on Wednesday weakened against the dollar, losing 1.47 percent at the parallel market also, known as the black market.

The local currency was quoted at N1,500 per dollar on Wednesday, weaker than N1,478/$1 closed on Tuesday at the parallel market.

After it’s two days Monetary Policy Committee (MPC) meeting on Tuesday, the CBN retained the asymmetric corridor at +100/-300 around the monetary policy rate (MPR), retained the cash Reserve Ratio (CRR) of commercial banks at 45.00 percent and kept the liquidity ratio constant at 30.00 percent.