Following the significant changes to the Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) during its Monetary Policy Committee (MPC) meeting on Tuesday, investors in the Nigerian stock market lost roughly N1.5 trillion of their capital.

The MPR was raised from 18.75% to an unprecedented MPR height of 22.75%, an unprecedented 400 basis points higher than before.

With the inflation rate rising to 29.90% annually in January and the January 2024 Consumer Price Index (CPI) report indicating that food inflation increased to 35.41% during that time from 33.93% in December 2023, the decision was made to abruptly increase the MPR to address the system’s high rate of inflation and substantial liquidity.

The total value of investments made on the Nigerian Exchange Limited (NGX) is represented by the NGX market capitalization, which decreased from N55.810 trillion on Monday to N54.317 trillion at the close of trading on Wednesday.

Following the announcement of the new MPR by CBN Governor Yemi Cardoso on Tuesday, investors lost N773 billion on the stock market, and on Wednesday, it fell by an additional N720 billion.

In a similar spirit, the NGX All Share Index, or ASI, another important stock market indicator, saw a 2.7% drop for the second day in a row, closing at 99,266.02 points on Monday after closing at 101,995.53 points on Monday.

The NGX ASI fell 1.4% and 1.3%, respectively, on Tuesday and Wednesday, according to trading analysis.
Trade turnover settled lower in the market than it had in the previous session, with a 4.8% decrease in transaction value. 10,549 transactions totalling 396.23 million shares, valued at N5.83 billion, were completed.

The market’s immediate reaction to the 4% increase in MPR caused the benchmark NGX All Share index to close lower, which analysts attributed to selloffs in expensive stocks and profit-taking in blue-chip companies.