Nigeria has officially devalued its currency by nearly 10 percent, a step the country's central bank said was taken to shore up the naira, which has continued to fall amid declining national oil revenues.
The bank's monetary policy committee announced the move at a meeting in Abuja, where the committee also raised the lending rate from 12 to 13 percent.
"In the committee's opinion, a more flexible naira in the face of nonexistent fiscal buffers was the most viable option at a time of heightened demand pressure for foreign exchange and falling oil prices," Central Bank Governor Godwin Emefiele said.
"The committee was therefore of the view that, if it failed to adopt the right policy actions now, the market would force the bank to take more drastic actions in the future with far less foreign exchange reserves," he added.
The decision to devalue the naira, according to analysts and central bank figures, appears aimed at saving the country's dwindling foreign reserves, which fell to a five-month low of $37.17 billion this week – down 5.1 percent from the previous month – as the central bank stepped up its defense of the ailing currency.
Analysts say the decision to raise interest rates, meanwhile, was aimed at encouraging deposits – a prime means of keeping lending commercial institutions in business.
According to Emefiele, the bank also moved the private cash reserve ratio from 15 percent to 20 percent, while retaining the public-sector cash reserve ratio at 75 percent.
The currency devaluation, Nigeria's second since 2011, comes as bad news for debtors. It also means an automatic hike in local prices for certain essential goods, due to Nigeria's import-based economy.
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