The naira surged to N1,500.32/$, marking its best daily gain since March, driven by increased inflows from the CBN and anticipated interest rate hikes. The CBN's efforts, including a $106.5 million injection, aim to stabilize the currency amid rising inflation and economic challenges.
The naira achieved its largest daily gain since March, appreciating by nearly N100/$ to N1,500.32 on Monday. This surge, driven by increased inflows from the Central Bank of Nigeria (CBN) and anticipated interest rate hikes, saw the naira gain 640 basis points from Friday's N1,596.92/$ rate. In the black market, the naira rose to N1,570 per dollar, up slightly from N1,580.
The CBN's injection of approximately $106.5 million into the forex market last week helped stabilize the currency amid rising demand and seasonal summer increases. With inflation hitting 34.19% in June, the CBN's Monetary Policy Committee (MPC) is expected to implement another rate hike, following the previous increase to 26.25% in May.
Goldman Sachs economist Andrew Matheny suggested more aggressive measures are needed to curb inflation and reassure investors. The ongoing naira depreciation and 18 consecutive months of rising prices have pushed many Nigerian households below the poverty line, with an estimated 87 million people living in poverty according to World Bank data.
The financial market is closely watching the MPC's upcoming meeting for stronger actions to combat inflation and support the naira.
