The Governor of the Central Bank of Nigeria (CBN) Mr. Olayemi Cardoso has assured the CBN is now focused on price stability and will introduce a predictable foreign exchange (FX) policy to ensure transparency in the market.
He also said the opaqueness in the FX market and policy flip-flops is over.
Mr. Cardoso spoke during a panel session at the 2023 Nigeria Economic Summit in Abuja.
He said Nigeria’s FX market going forward must be fit for purpose. “Where we really want to get to is a place where we have a foreign exchange market that is fit for purpose; a foreign exchange market that works for everybody; a foreign exchange market where you know the rules; a foreign exchange market where there are no policy flipflops, and a foreign exchange market you can predict. That is a bigger deal and that is what we need to do” he stated.
“If we are going to be able to create an ecosystem that will out-survive us all, we will have to do some basic things. Some of which we have attempted to do even though we are still in our early days but we are doing them” he further stated.
The CBN Governor explained that the CBN will “need to have a situation where the rules are clear to all those that deal in FX business and we are going to do that.”
“We are going to come out with an elegant document that will tell you exactly what the rules are” he promised.
“I understand the issues with respect to people feeling some discomfort with the way the market has gone recently but my sense is that we will come out with something that is representative of the true market because the market itself overtime will adjust with some of these things” he further promised.
Mr. Cardoso also said the fuel subsidy removal and the free float of the naira are yielding positive results.
“We have had an enormous interest from foreign portfolio investors, foreign stakeholders who really and truly are interested in continuing to engage with Nigeria. The reason of course is that they know where this is headed.
Yes, you will find a CBN that going forward will take its objective of price stability very seriously indeed” he assured.
“We have a situation where the bleeding with respect to Nigerian resources has stopped. And I refer specifically to the subsidy. To be honest, when people say they are concerned, to be honest, I think that was the time to be concerned. From what I can see, right now, we are on the path of rebuilding. That is so important for us at the monetary side” Mr. Cardoso said.
“If the fiscal is bleeding, it makes life difficult for us on the monetary side. So, to the extent that the bleeding has stopped, it is a big deal. It isn’t anything for anybody to take lightly. This is something that we tried to do for successful years and the result for not doing it, it is what we are experiencing” he noted,
“The unification of the foreign exchange market is not by any means perfect but at least substantial more revenues have come in. So, the combination of those two things in addition to some of the other efforts being done on the fiscal side is commendable. In due course, we will see the outcome” he assured.
So, when people say they are concerned, and they are worried, the time to do that quite frankly is gone. The time we are rebuilding is not the time you should be running anywhere” he noted.
The CBN Governor said therefore indeed still more difficult decisions to be made.
“There are more difficult decisions to be made, no doubt about that. But the two very difficult decisions, painful but they have been taken and now it is a question of managing things till we get to where we really want to be” he assured.