Dec 15 (USA) - After the US Fed finally increased its benchmark rate to 0.5-0.75% the US Dollar surged to a 14 year high.
The euro hit a 21-month low of $1.0468, close to its 2015 low of $1.0457 - the weakest since 2003.
Against the yen, the dollar jumped as much as 0.7 percent on the day to hit 117.87, its strongest since February.
The US Fed Chairperson also indicated that they will further raise the interest rates in 2017 two times or more. Her words sent banking stocks in USA to new highs as investors digested the comments and their implications on some of the biggest money centers in the world.
In Nigeria, the CBN will have to adjust its key benchmark lending rate which is low currently at 14% when compared to inflation which is now at 18.48% according to official figures released today by the Nigerian Bureau of Statistics. However in real terms the number is higher than that and we should expect inflation to rise above 20% in 2017.
The wait and wait policy of CBN is harming the Naira value which will be under even more pressure now because the US Dollar is pulling higher. Even the 1 billion that they want to raise through the Eurobond in first quarter of 2017, Nigeria will have to pay more now than if they had done it by now.
Normal people like us can only hope and pray that the higher authorities at the CBN will take the necessary hikes in the interest rates in order to save the Naira and fight inflation and indeed save Nigeria and Nigerians from economic calamity.
Can't think of another country the size of Nigeria that is keeping its benchmark lending rate more than 400 basis points lower than inflation. It is fairytale stuff to think that private banks will lend near the benchmark lending rate even if it is sharply below inflation.
It is some of the most basic economic things they teach students in level 1 in college.
reporting for easykobo.com on Thursday, Dec 15 2016 from Lagos, Nigeria
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