Naira stays above N1600 at parallel market as MPC begins meeting

The naira, week on week, posted some recovery against  the Dollar at the parallel market as the Central Bank of Nigeria set in motion its first Monetary Policy Committee (MPC) meeting under Yemi Cardoso.

The naira appreciated at the parallel forex market where forex is sold unofficially, the exchange rate quoted at N1,650/$1, an increase of 6.06 per cent against N1,750 it closed the previous day,   

The naira initially traded around N1600 to the USDT early Monday posting a weekly gain of more than 25 per cent for the week, although this has moved above the N1600 mark as at the time of this report.

Many analysts are expecting a significant increase in the benchmark interest rate, also known as the monetary policy rate.

Following a few missed monetary policy sessions, Nigeria is expected to implement two aggressive interest rate hikes in less than two months to control inflation and strengthen the naira, according to a Reuters poll released on Friday.

Nigeria’s monetary policy rate is expected to increase by 225 basis points to 21.00 per cent on February 27 during Governor Olayemi Cardoso’s first monetary policy meeting, according to a survey conducted last week.

With the local currency still trading near its record low on the black market and January inflation increasing to 29.9 percent year over year, market pundits anticipate considerable policy tightening and the announcement of de facto system-wide tightening measures.

Throughout last week, the naira experienced a significant decline in value, hitting a low of N1,880 to the dollar on Thursday.

This depreciation has widened the disparity between the unofficial market rate and the official rate of the naira, presenting challenges to the government’s goal of unifying the two rates.