IMF Praises CBN's Efforts as Naira Shows Signs of Stability in Recent Months

The International Monetary Fund (IMF) has highlighted positive developments regarding Nigeria's local currency, the naira.

The IMF notes that the naira is beginning to show signs of stability, attributing this progress to strategic measures implemented by the Central Bank of Nigeria (CBN).

These measures include addressing foreign exchange backlogs and implementing interest rate hikes.

The CBN's efforts have been part of a broader strategy to combat inflation, which currently stands at approximately 30 percent.

On September 24, the CBN's Monetary Policy Committee increased the interest rate by 50 basis points, bringing it to 27.25 percent.

This move, while facing criticism from groups like the Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI), has been praised by the IMF. Tobias Adrian, the IMF’s financial counsellor, stated, “The rate hikes implemented so far have been appropriate, especially given the challenges posed by high inflation.”

Despite the World Bank recently describing the naira as one of the worst-performing currencies in sub-Saharan Africa in 2024, the currency has shown signs of stabilization over the past month. It has been trading between N1,700 and N1,600 per dollar in the parallel market and N1,500 to N1,600 in the official window.

The IMF commended the CBN's transition towards an inflation-targeting regime and efforts to liberalize the exchange rate, noting that these actions have helped stabilize the naira amidst ongoing economic challenges.