A member of the Central Bank of Nigeria (CBN) Monetary Policy Committee, Dr. Mo’ Omamegbe, has projected that Nigeria’s surging inflation will further devalue the exchange rate of the Naira as cost of producing import-dependent products continues to rise month-on-month in the country.
Omamegbe, who is a former Head of Strategy Securities and Exchange Commission of Nigeria (SEC Nigeria), expressed serious concern that rising prices of goods and services had the potential of worsening the exchange rate of the Naira with the attendant negative implications for the nation’s economy
The economic expert said: “The rising inflation in the country constitutes a major macroeconomic challenge which is exacerbated by foreign exchange pressures. We are an import-dependent economy.
“A higher inflation rate will further depreciate the value of the Naira as import prices become more expensive. The foreign exchange challenge remains daunting and addressing this challenge should be of utmost importance”, Omamegbe added.
Commenting on the apex bank’s measures in recent months, another member of the MPC, Mr. Festus Adenikinju, commended the CBN for stabilising the official exchange rate widow of the market despite the fiscal and other macroeconomic militating indices.
He said: “Unexpectedly the Naira appreciated in the I&E window at a time when currencies across the globe are depreciating against a strong dollar.
“It is also unexpected at a time the huge demand for dollars in the commercial banks outstripped supply”, the expert added.
The apex bank’s MPC had at its last meeting raised the interest rate to 14% in July 2022 and the savings deposit interest rate from 1.4% to 4.2% to curb rising inflationary pressure as well as encourage FX inflow into the economy.
Despite the desirable policy measures, the Naira exchange rate continues to come under pressure as the Naira crashes to above N705/$ at the black market.
It would be recalled that the latest inflation rate released by the National Bureau of Statistics (NBS) indicated that despite recent monetary measures by the CBN on interest rate, inflation rate for July 2022 rose to a 17-year high of 19.64% from 18.6% recorded in the preceding month.
