USD strengthens against major currencies   

Sep 23 (Lagos) - The US Dollar strengthened against major currencies after the US Federal Reserve raised its key benchmark lending rate by 0.75% and signaled further rate increases before the end of this year. The reason for increasing the interest rates is to curb inflation which is raging ever since the US and its allies imposed sanctions against Russia after it invaded its former colony, Ukraine. 

The US Dollar rose significantly against the Australian Dollar, Euro, Canadian Dollar, Pound sterling, Chinese Yuan, Singapore Dollar and the Indian Rupee. 

The move is expected because every time a Central Bank raises its benchmark lending rate, it leads to strength in its currency because interest rates and currency values have an inverse relationship and interest rates are the major factor that determines the value of a currency.

Coming back home, the situation is dire to put it mildly. The current leadership of Central Bank of Nigeria lowered its key benchmark lending rate in November 2015 against all economic indicators only to raise it back 3 months later in 2016 when the Naira crashed beyond all expectations. This is when we entered an era of trial and error policies and flip-flops at the Apex Bank. Naira was still in the 300-400 to 1 USD range back then and officially in the 220 range. Fast forward 6-7 years and the Naira is now at 430 levels officially and in the region of 710 in the parallel markets. What is more alarming is the statements given by the CBN Governor stating that the forex sales to Banks will be brought to an end. If more of such policies of current CBN leadership are allowed to manifest, we could be looking at Dollar to Naira rate of 1000 or higher soon. 

reporting for on Friday, Sep 23 2022 from Lagos, Nigeria

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