Nigerian currency Naira was seen to have drastically devalued from its usual N158 to N168 per $1, and this is confirmed by the Central Bank Governor 'Mr. Godwin Emefiele' as due to the increasing demand of the Apex Bank to cushion the cost of funds to the banking sector, and as such leading to an increase in lending rate from commercial banks to businesses.
He also stated that due to the level of excess cash in the banking system , it is now very essential for the CBN to give attention to the founts of foreign exchange mandate, it is due to this fact that the Naira has to be devalued.
Since the MFR is the marginal point through the Apex Bank can carry out its functions which includes lending to the Deposit Bank to enhance cash flow in the banking sector, and that is why it has to do everything necessary to the extent to cutting down the Naira value to meet with the demand pressure, that to say there is an increase of 100 basis points in MFR, which according to the CBN governor that it has been approved to be widened to a midpoint of 200 basis points which ranges from +/-3 percent to +/-5 percent.
The major player to this whole scenario which cannot be eased is the recent and steady fall in price of the crude oil, and on that account, there is nothing anyone can do as to protect the Naira by maintaining its stability for the exchange rate.
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