The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso said the pressure on forex has calmed down following stability in supplies.
Mr. Cardoso stated this in an interview with Bloomberg in London on Tuesday, June 25, 2024, while sharing key insights on the current state of the market, mainly focusing on the stability of the Naira and inflation rates.
While highlighting a period of stability following previous volatility in the foreign exchange market, he expressed optimism about the recent improvements in liquidity and return of confidence to the market.
He attributed the new development to increased liquidity and a calmer approach from market participants on both the buy and sell sides.
“In the past, people were panicking and front-loading their requests,” he explained, stressing that “Now, a lot of that has calmed down. There’s no inclination to do that because liquidity has returned to the market.”
Mr. Cardoso also highlighted the significant achievement of merging disparate exchange rates into a more unified system.
“We had two different rates; right now, we more or less have one rate. And we believe that this is good. It allows companies to plan,” he stated, emphasising the importance of a predictable exchange rate for economic planning and investment.
Furthermore, he expressed confidence in the current market dynamics, where willing buyers and sellers operate freely, noting that it had contributed to the stability of the Naira. He, however, stressed the importance of continuous observation and management to ensure the market benefits all participants.
Governor Cardoso highlighted the crucial role of coordinated monetary and fiscal policies in achieving economic stability, adding that the collaboration was essential for managing the macroeconomic fundamentals that influence the market, aiming to provide the best value for the Naira.
He reiterated the determination of the Bank’s Monetary Policy Committee (MPC) to tame inflation through conventional methods.
He noted a deceleration in the month-on-month inflation rates, highlighting it as a positive development. He assured that the Monetary Policy Committee (MPC) members remained vigilant in monitoring inflation trends and ensuring a moderation of inflation numbers.
“MPC members will continue to monitor the trajectory and are determined to ensure that they put inflation under control,” he asserted.
It will be recalled that Nigeria’s annual inflation rose to a 28-year high of 33.95% in May 2024, but recent data from the National Bureau of Statistics reveals that the month-on-month inflation rate had slowed for the third consecutive month, validating the effectiveness of the Central Bank of Nigeria’s monetary policy tightening measures.
