The naira defied the objective of the 50 percent cash reserve ratio (CRR) on public sector deposits on Tuesday as it eased against the US dollar at the inter-bank market.

The data from the Financial Market Dealers have revealed that the local currency has lost 72 kobo against the US dollar at the inter-bank market to close at N160.12/$ compared to N160.12/$, the previous day.

Sewa Wusu, head of research, Sterling Capital Markets Limited stated that the depreciation in Naira is due to strong forex demand.

Analysts had said that the implementation of the CRR is required in order to start the process that will deliver higher deposit rates and naira stability.

However, the expected appreciation in the local currency, exchange rate and fortunes of customers through enhanced interest are yet to manifest.

The CBN last week commenced the implementation of 50 percent cash reserves ratio (CRR) on public sector deposits as it withdrew about N1 trillion from the banking system.

Kingsley Moghalu, deputy governor of CBN in charge of the financial system stability (FSS) directorate, who voted for increase in CRR on public sector deposits at the last Monetary Policy Committee (MPC) said that a reduction of the MPR at this time is not the right path to take, stressing that it will affect the stability of the naira because the certain massive capital outflows will put pressure on the currency which will precipitate either a serious run on our foreign reserves or a depreciation/devaluation of the currency that will be a channel for inflation in an import-dependent economy.