The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has described the Nigerian currency as “undervalued.”
Mr Cardoso stated this Wednesday at the Launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report.
“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate,” he said.
In recent years, the Naira has fallen against the United States dollar at both the official and unofficial markets.
As of Tuesday, Naira fell to N1,372 in the parallel market and N878 in the official market.
Mr Cardoso said he is optimistic about stabilising the FX market, citing initiatives to attract more dollars and collaboration with the Ministry of Finance and NNPCL to enhance FX flows and boost reserves.
“I am pleased to note our collaboration with the Ministry of Finance and the NNPCL to ensure that all FX inflows are returned to the Central Bank. This coordinated effort will greatly enhance the Bank’s FX flows and contribute to the accretion of reserves.
“The expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN,” he said.
He noted that the move is designed to streamline and unify multiple exchange rates, foster transparency and reduce arbitrage opportunities.
The expected result is a consistent and stable exchange rate, which will boost investor confidence and attract foreign investment.
He said the CBN is actively implementing a comprehensive strategy to improve FX market liquidity across short, medium, and long term horizons.
“Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years,” he said.
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Mr Cardoso stressed the significance of maintaining financial market integrity to instill confidence and meet objectives.
With the conclusion of an independent forensic review and the subsequent clearance of valid FX transactions backlog, he assured of government’s commitment to promptly addressing any infractions and abuses in the management of foreign exchange.
“In our efforts to stabilise the exchange rate, it is imperative that we prioritise transparency and create a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike,” he added.
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