Since the beginning of November, the naira lost more than 7 percent to the USD as falling oil prices dragged confidence on the country's assets down.
Extracts from Central Bank of Nigeria Communique
In order to allow some flexibility in the exchange rate to stem speculative activities and depletion of reserves and to further tighten the monetary policy stance to anchor inflation expectations the committee decided to:
1. Increase the Monetary Policy rate by 100 basis points from 12 to 13 percent
2. Increase the Cash Reserve Ratio on private sector deposits by 500 basis points from 15 percent to 20 percent with immediate effect
3. Move the midpoint of the official window of the foreign exchange market from N155/US$ to N168/US$
4. Widen the band around the midpoint by 200 basis points from +/-3 percent to +/-5 percent.
5. Retain public sector Cash Reserve Ratio at its current level of 75 percent
6. Maintain a symmetric corridor of +/- 200 basis points around the Monetary Policy rate
7. Retain the foreign exchange trading position at 1 percent.