During a meeting of the Central Bank Monetary Policy Committee (MPC) in Abuja on Tuesday, Forashodun Shonoubi, the Acting Governor of the Central Bank of Nigeria, stated that they have been intervening in the market for some time.
Shonoubi further mentioned that the Central Bank expects the market to ease. As part of their actions, the MPC raised the monetary policy rate (MPR), which measures interest rates, to 18.75% from 18.5%.
On 14 June 2023, the Central Bank of Nigeria abolished the fragmentation of the foreign exchange market into various windows and allowed depository banks to freely float the naira against the dollar and other international currencies. Unlike before, where the Central Bank determined the exchange rate, foreign currency buyers and sellers on the official foreign exchange market can now state their preferred rate.
Regarding the current market volatility, Shonoubi explained that this is a market that anyone can participate in through accredited institutions. As a result, the Central Bank expects the volatility to normalize over time.
He emphasized that the Central Bank’s role is to intervene and maintain the market at a reasonably stable level. The Central Bank continuously assesses the market’s level and decides on interventions as markets continue to fluctuate around this level. This proactive role ensures stability and fosters a conducive economic environment.