The Nigerian naira depreciated on Wednesday, less than 24 hours after the Central Bank of Nigeria (CBN) monetary policy committee (MPC), decided to employ a flexible exchange rate system.

The naira depreciated from 344 to the dollar at the parallel market in Abuja on Tuesday, to 347 against the greenback.

In Lagos, the naira plunged from 347 and 350 against the dollar, while the British pound kept hovering around N495.

On the official side however, the naira remained unchanged to the dollar, with the CBN peg at 197, while the pound moved from 285 to 288. The Euro appreciated to 221 to 220.

The Nigerian Stock Exchange (NSE), however responded positively to the MPC decisions, with the all share index (ASI) rising from 27,232 on Tuesday to 28,164 at 2pm on Wednesday.

MPC on Wednesday warned of an imminent recession, saying the bank would work on a flexible exchange rate regime.

“The committee expressed concern over sustained pressure in the foreign exchange market and the necessity of implementing reforms to engender greater flexibility of rate and transparency in the operation of the inter-bank foreign exchange market,” Godwin Emefiele, governor of the bank, said.

“Accordingly, the committee noted that it was time to introduce greater flexibility in the management of the foreign exchange market. The committee reaffirmed commitment towards maintenance of price stability and reiterated the need to reappraise the coordination mechanism between monetary and fiscal policy and initiate reforms, for the purpose of more efficient policy synchronization and management.”

The MPC said the monetary policy rate (MPR) and cash reserve ratio (CRR) will remain at 12 percent and 22.5 percent respectively. Liquidity ratio was also held at 30 percent.