The Naira has lost over half its value since Yemi Cardoso became Governor of the Central Bank of Nigeria (CBN). As of September 20, 2024, the currency fell to N1,541.52 per dollar from N747.76/$1 a year earlier—a 51.49% depreciation, according to FMDQ data.
Despite CBN’s efforts to stabilize the currency, including boosting foreign exchange (forex) reserves, the Naira continues to decline.
Forex Reserves Increase by $4.12 Billion
Over the past year, Nigeria’s foreign exchange reserves rose by 12%, from $33.28 billion in September 2023 to $37.39 billion in September 2024. This increase shows the CBN’s attempts to strengthen market liquidity and manage external financial challenges. However, the reserve growth hasn’t been enough to halt the Naira’s significant drop.
Cardoso introduced several reforms to curb inflation and improve the currency, yet challenges remain. The widening gap between forex demand and supply, high inflation, and low investor confidence continues to pressure the Naira.
Interest Rate Hikes Under Cardoso’s Leadership
Since Cardoso’s appointment, the CBN has raised interest rates four times, from 18.75% to 26.75%, to combat inflation. These hikes, totalling 800 basis points, are aimed at tackling inflation, particularly in the core and food sectors. The Monetary Policy Committee (MPC) is set to meet in late September to review the current rate.
Some financial experts, such as Professor Uche Uwaleke, have called for a pause in rate increases, suggesting that Nigeria’s recent slowdown in inflation justifies holding off on further hikes.
Inflation Moderates After 19 Months
Nigeria’s inflation rate dropped for the first time in 19 months, easing from 34.19% in June 2024 to 33.40% in July, and further to 32.15% in August. This marks two consecutive months of inflation declines.
Experts Assess Cardoso’s Performance
Development economist Dr. Aliyu Ilias described Cardoso’s approach as inconsistent, arguing that inflation reduction has been minimal. He rated the CBN governor’s performance below average, emphasizing the need for a more strategic approach.
In contrast, financial analyst Brain Essien noted some success in inflation targeting but urged the CBN to focus on strengthening the Naira. Essien suggested the CBN find more innovative ways to stabilize the currency, while maintaining the current interest rate of 26.75%.
