The Nigerian currency, the naira, received a lifeline from the US Federal Reserve after it slashed its key lending rate by 0.5 percentage points, with more cuts expected in the future.
The decision, made on Wednesday, September 17, marked the first rate reduction in over four years
The interest rate cut, announced by Federal Reserve Head Jerome Powell, means lower borrowing costs.
Powell said that lowering borrowing costs will help boost domestic spending and investment in skills development.
However, the other side of the decision is that the rate cut will weaken the US dollar in global foreign exchange markets.
For Nigeria, which has been battling currency depreciation and inflation, the US Federal Reserve’s decision offers another hope of recovery.
Since the start of 2024, the naira has lost over 100% of its value against the dollar, falling to as low as N1,656 in the official market.
However, on Thursday, September 19, the naira closed against the dollar at N1,544.02 at the NAFEM window, a sign of good things to come.
The Central Bank of Nigeria Monetary Policy Meeting(MPC) will sit on Monday, September 23, and Tuesday, September 24.
The decision will likely affect how much gain Nigeria can maximize from the US federal interest rate cut because a weaker dollar could lower the cost of imports and reduce pressure on Nigeria’s foreign reserves.
Chinedu Okafor, a Lagos-based economist, expressed optimism about brighter days ahead for naira.
He said:
Suleiman Abdullahi offers a different perspective:
He said:
Earlier, TimesNow.com.ng reported that Nigerians identified the emergence of two cryptocurrency platforms as the reason for the recent fall of the naira.
The earlier decline of the naira was attributed to alleged market manipulation by Binance.
Nigerians have blamed the latest depreciation on new crypto exchange platforms, namely BYBIT and BITGET.
Proofreading by James, Ojo Adakole, journalist and copy editor at TimesNow.com.ng.
Source: TimesNow.com.ng
