The IMF sheds light on the factors contributing to the recent rebound of the naira, citing economic policies, market interventions, and global conditions. Discover the reasons behind this positive shift in Nigeria’s currency.
The International Monetary Fund (IMF) has noted that Nigeria’s currency, the naira, is starting to stabilize due to recent economic measures.
The IMF credited this development to the efforts of the Central Bank of Nigeria (CBN) in clearing outstanding foreign exchange backlogs and increasing interest rates, measures designed to stabilize the economy.
At a Tuesday press briefing in Washington DC, the IMF recognized the effects of these policies.
The IMF stated in its report, “In Nigeria, rate hikes and the resolution of overdue domestic central bank foreign exchange obligations have contributed to increased signs of stability for the naira.”
At the same conference, Tobias Adrian, the IMF’s financial counselor and director of monetary and capital markets, emphasized the CBN’s success in reducing inflation and stabilizing the foreign exchange market.
“The central bank’s move towards an inflation-targeting approach and the liberalization of the exchange rate are developments we welcome,” Adrian stated.
He reiterated the suitability of the CBN’s rate hikes in light of ongoing inflation issues. “The rate increases implemented have been appropriate, particularly considering the difficulties posed by high inflation, which remains at approximately 30 percent.”
Despite recent improvements, the naira has encountered significant challenges in 2024. On October 16, the World Bank announced that it continues to be one of the weakest-performing currencies in sub-Saharan Africa.
The report connected the currency’s depreciation to a rise in demand for dollars and inadequate foreign currency inflows.
The IMF observed indications of recovery recently, as the naira has been fluctuating between N1,700 and N1,600 per dollar in the parallel market while stabilizing within a range of N1,500 to N1,600 in official exchange markets.
