Dollar Shortage Widens Official, Black Market Rates Gap

As President Bola Tinubu takes office, the Central Bank of Nigeria (CBN) holds its first meeting, addressing foreign exchange market issues, naira float, benchmark interest rate, petrol subsidy removal, and rising inflation. The two-day meeting under acting CBN Governor, Mr. Folashodun Shonubi, faces challenges due to economic headwinds, rising inflation, and currency devaluation against the US Dollar.

Analysts are divided on the possible outcomes, considering Tinubu’s preference for monetary easing despite inflationary pressures.

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Some expect a rates hike to control inflation, while others suggest a pause to support economic growth and avoid negative impacts on businesses. The analysts foresee either retaining or reducing the Monetary Policy Rate (MPR) in the meeting.

Meanwhile, economist Dr. Muda Yusuf raises concerns over the recent growth in broad money supply, which has contributed to pressure on the naira in the foreign exchange market. He calls for intervention measures to manage the volatility and maintain investors’ confidence, suggesting the CBN investigates and curbs the significant surge in money supply.

Overall, the CBN’s meeting is significant for the country’s economic stability and to address the challenges brought about by the recent changes in government policy.