The slight increase comes as a result of the CBN hike of interest rates
Oct 12, 2011 – The naira increased slightly at N158.60 against the dollar on the interbank market on Tuesday.
It came up to 3.4 per cent from Monday’s close of N164.20 and five per cent firmer than the record low of 167.8 plumbed shortly before Monday’s unscheduled Central Bank of Nigeria (CBN) meeting.
The three per cent gain came on the heels of the hike of interest rates by the Central Bank of Nigeria (CBN).
CBN hiked the benchmark interest rate, the Monetary Policy Rate, MPR, by 275 basis points to 12 per cent and implemented several other tightening measures to counter pressures on the currency and inflation.
Most analysts had expected CBN to raise rates by 100 basis points at the extraordinary meeting, which was called in response to a sharp depreciation of the naira.
The tightening measures will create an incentive for investors to hold the naira and free up dollar supply, but the central bank will have to back its actions by meeting dollar demand at its auctions.