On Wednesday, Nigeria’s central bank governor announced a seventh consecutive interest rate increase to 18.5% as the country grapples with severe inflation. Due to a weakening economy and national currency, Nigerian residents have shown increasing interest in cryptocurrencies and the e-Naira.

Interest Rates in Nigeria Rise to Highest Level Since 2006

Central Bank of Nigeria raised interest rates from 18% to 18.5% in a seventh straight hike to tame inflation and prop up its national currency, Naira. The unprecedented increases in the African nation brought interest rates to the highest level since the policy rate was adopted in 2006. The hike was in line with economists’ expectations.

Over a year, Nigeria’s Monetary Policy Committee (MPC) lifted the rates by whopping 700 basis points to slow down the inflation rate that’s been at more than double the top end of its 6% to 9% target range for nearly a year. The MPC said inflation was fueled by high energy costs and constraints related to the supply chain and other factors beyond the central bank’s reach.

“The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”

– said Godwin Emefiele, Governor of Nigeria’s central bank.

Rampant inflationary pressures in Nigeria have weakened the value of fiat money, which could likely reduce external investments in the country and its gross domestic product (GDP) growth rate.

Nigeria Ranks First in Usage and Ownership of Cryptocurrencies

Meanwhile, Nigeria’s deteriorating economy and the eroded value of the Naira have forced residents to look for an alternative. Namely, a recent study showed that Nigeria had the world’s highest cryptocurrency usage and ownership rate last year.

To be more specific, 45% of the African country’s population either used or owned cryptocurrencies in 2022, amounting to more than 90 million people. Between 2019 and 2022, Nigeria witnessed a 17% surge in cryptocurrency usage and ownership, with over 34 million people adopting digital assets. Earlier this year, the Tokenist reported that failing monetary policies created a Bitcoin premium illusion on the local crypto exchanges.

Apart from decentralized crypto assets, many Nigerians also use e-Naira – the central bank digital currency (CBDC) launched in 2021. Since its introduction, the number of CBDC users soared more than 12 times to 13 million, while the value of e-Naira transactions increased by 63% to $47.7 million.

This article originally appeared on The Tokenist

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