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The Central Bank of Nigeria (CBN) has stated that Nigeria’s high inflation would further reduce the value of the Naira as imported products become more expensive.
This was disclosed by Dr Omamegbe Mo, a member of CBN’s Monetary Policy Committee.
Despite multiple interest rate hikes by the CBN, inflation continues to rise. Nigeria’s current inflation rate for July 2022 rose to a 17-year high of 19.64% from 18.6% recorded in the previous month of June 2022.
Dr. Mo that a rise in prices would increase the exchange rate crises in the Nigerian economy.
“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,” he said.
The CBN also praised the stability of the official exchange rate widow, Adenikinju, Adeola Festus, another member of the MPC said that “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.”