Harsh forex reforms will strengthen naira – Cardoso
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has said that harsh reforms by the bank will eventually stabilise the naira, as well as the economy, in the long run. Cardoso stated this in an interview with Arise TV on Monday which was monitored by Daily Trust, saying that the bank had […]
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has said that harsh reforms by the bank will eventually stabilise the naira, as well as the economy, in the long run.
Cardoso stated this in an interview with Arise TV on Monday which was monitored by Daily Trust, saying that the bank had rolled out critical policies that would strengthen the naira which had been falling against the dollar.
He said, “I think it’s very important to say that we have been in a situation in the recent past where there has been a shortage of liquidity in the foreign exchange market arising from certain distortions, and that itself has created a situation where there is volatility in the market.
“We have looked at this over the course of weeks and come up with certain policies that have focused on creating an environment whereby liquidity comes back to the market and where we can see a more vibrant market than we had before.”
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Speaking further, the apex bank governor said that the move made by the Nigerian National Petroleum Company Ltd (NNPCL) to transfer its accounts to the CBN was boosting the confidence of investors.
Cardoso said, “I think the recent move to have NNPCL and some of the MDAs move their funding straight to the central bank also sends a very powerful signal to the confidence.
“Nigeria is going in the direction that many investors want to see it go. As the confidence comes back and their money starts coming in, which I see happening, volatility begins to reduce. The wide swings you have been seeing in the foreign exchange market begin to reduce, and I believe very strongly that the volatility will reduce and the foreign exchange market will stabilise.
“There are a lot of foreign portfolio investors who are very interested in coming back to the Nigerian market. It is incredible, and if there is any group that has taken an interest, very methodically may I say, it is the foreign portfolio Investors.”
Overpopulation of CBN’s Office
Cardoso addressed the issue of overcrowding at the CBN headquarters. He indicated that the central bank’s internal arrangements were being reorganised for administrative convenience and efficiency. This reorganisation is seen as necessary to address the problems arising from overcrowding and to enhance overall operational efficiency.
Monetary Policy Committee (MPC) Meeting
Regarding the MPC, which is expected to be held this month, Governor Cardoso expressed his focus on ensuring that the MPC is impactful and complements the fiscal side of the economy. He indicated that the MPC’s direction is aligned with the CBN’s renewed focus on stabilising prices and lowering inflation, reflecting the new direction and core mandate of the central bank.
CBN Interventions
Governor Cardoso acknowledged the necessity of interventions in Nigeria, noting their role in channelling resources to those in need. However, he emphasised the importance of having a proper framework to ensure these interventions reach the intended beneficiaries. The CBN plans to focus on its core strengths while collaborating closely with entities with expertise in intervention spaces. This approach aims to avoid the pitfalls of failed interventions and ensure that the resources are used effectively and reach the right people.
NNPC and Foreign Exchange Liquidity
Governor Cardoso highlighted the recent move to have the NNPC and other government agencies move their funding into the Central Bank of Nigeria (CBN) as a positive and confidence-boosting measure. This move is viewed by external observers as a significant step forward. It is expected to create a more transparent market system and increase foreign exchange inflow. By involving major state-owned entities like the NNPC in these reforms, the CBN aims to strengthen the overall financial system and enhance economic stability.