The International Monetary Fund (IMF) has reported that Nigeria’s currency, the naira, is beginning to show signs of stability. This positive development is attributed to recent interest rate hikes and efforts by the Central Bank of Nigeria (CBN) to clear foreign exchange backlogs.
The IMF shared this observation during a press briefing in Washington, DC, on Tuesday. In its report, the financial institution remarked, “In Nigeria, the recent rate hikes and clearing of overdue domestic central bank foreign exchange obligations have contributed to the naira displaying more signs of stability.”
Tobias Adrian, IMF’s Financial Counsellor and Director of Monetary and Capital Markets, acknowledged the CBN’s ongoing efforts to control inflation and stabilize the foreign exchange market. Speaking at the conference, he said, “The central bank has been transitioning to an inflation-targeting framework and has liberalised the exchange rate, which we view as a positive step.”
Adrian further emphasized the importance of the measures taken, adding, “The rate hikes implemented so far have been timely and necessary, especially given the significant challenges posed by inflation, which remains elevated at around 30 percent.”
While the naira has shown some signs of recovery in recent months, it has faced persistent struggles in 2024. The World Bank, in a report released on October 16, noted that the naira remains one of the worst-performing currencies in sub-Saharan Africa. The report cited a continuing high demand for dollars, coupled with limited inflows of foreign currency, as major factors contributing to the naira’s depreciation in recent months.
Despite these challenges, the IMF highlighted that the naira has demonstrated some improvements, particularly in the parallel market, where it has fluctuated between N1,700 and N1,600 to the dollar. In official trading windows, the currency has been more stable, trading between N1,500 and N1,600.
