Naira is Currently Undervalued – Cardoso
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Nigeria News
The Central Bank of Nigeria Governor, Olayemi Cardoso, labeled the national currency as "undervalued" during the unveiling of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report on Wednesday. Mr. Cardoso expressed confidence that with concerted efforts on the fiscal front, authentic price discovery would be accelerated in the near future. He emphasized that this collaborative strategy would play a pivotal role in achieving a more equitable and stable exchange rate.
In recent years, the Naira has experienced a decline against the United States dollar in both the official and unofficial markets.
As of Tuesday, the Naira depreciated to N1,372 in the parallel market and N878 in the official market.
Governor Cardoso expressed optimism about stabilizing the foreign exchange (FX) market. He highlighted initiatives aimed at attracting more dollars and collaboration with the Ministry of Finance and NNPCL to improve FX flows and bolster reserves.
"I am pleased to report our collaboration with the Ministry of Finance and the NNPCL to ensure that all FX inflows are directed to the Central Bank. This coordinated effort will significantly enhance the Bank’s FX flows and contribute to reserve accretion.
“The anticipated 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 stated.
Cardoso emphasized that these measures are designed to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities. The expected outcome is a more consistent and stable exchange rate, fostering investor confidence and attracting foreign investment.
The CBN is actively implementing a comprehensive strategy to enhance liquidity in the FX market 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 remarked.
Cardoso underscored the importance of maintaining financial market integrity to instill confidence and achieve objectives. With the conclusion of an independent forensic review and the subsequent clearance of a valid FX transactions backlog, he assured the government's commitment to promptly addressing any infractions and abuses in foreign exchange management.
"In our efforts to stabilize the exchange rate, it is imperative that we prioritize transparency and create a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike," he added.
The Central Bank of Nigeria Governor, Olayemi Cardoso, labeled the national currency as "undervalued" during the unveiling of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report on Wednesday. Mr. Cardoso expressed confidence that with concerted efforts on the fiscal front, authentic price discovery would be accelerated in the near future. He emphasized that this collaborative strategy would play a pivotal role in achieving a more equitable and stable exchange rate.
In recent years, the Naira has experienced a decline against the United States dollar in both the official and unofficial markets.
As of Tuesday, the Naira depreciated to N1,372 in the parallel market and N878 in the official market.
Governor Cardoso expressed optimism about stabilizing the foreign exchange (FX) market. He highlighted initiatives aimed at attracting more dollars and collaboration with the Ministry of Finance and NNPCL to improve FX flows and bolster reserves.
"I am pleased to report our collaboration with the Ministry of Finance and the NNPCL to ensure that all FX inflows are directed to the Central Bank. This coordinated effort will significantly enhance the Bank’s FX flows and contribute to reserve accretion.
“The anticipated 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 stated.
Cardoso emphasized that these measures are designed to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities. The expected outcome is a more consistent and stable exchange rate, fostering investor confidence and attracting foreign investment.
The CBN is actively implementing a comprehensive strategy to enhance liquidity in the FX market 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 remarked.
Cardoso underscored the importance of maintaining financial market integrity to instill confidence and achieve objectives. With the conclusion of an independent forensic review and the subsequent clearance of a valid FX transactions backlog, he assured the government's commitment to promptly addressing any infractions and abuses in foreign exchange management.
"In our efforts to stabilize the exchange rate, it is imperative that we prioritize 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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