Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), outlined his strategies for stabilizing the country’s foreign exchange (FX) market and addressing inflation concerns.
Nigeria’s FX market has faced considerable volatility since the onset of President Bola Tinubu’s government.
Naira plummets to record low of N1,000
Despite a brief surge in the local currency’s value on Monday, the naira quickly depreciated to an all-time low of N1,000 to the dollar on Tuesday.
Governor Cardoso emphasized that, if confirmed, his immediate priorities for naira stabilization would include addressing unsettled financial obligations within the CBN and establishing transparent rules for the FX market.
He stated, “Number one is what I will term an ‘operational issue.’ Right now, we have a situation where there are unsettled obligations by the CBN.
Whether it is 4 billion, 5 billion, or 7 billion, I don’t know, but definitely the immediate priority will be to verify the authenticity and extent of what is owed.”
“Number two, apart from the operational aspect, there is a system-related issue that involves ensuring that we come up with clear, transparent rules that all market participants can understand.
We can expect foreign investors and portfolio investors to engage if there is an open and transparent system that everyone comprehends.”
Governor Cardoso stressed the importance of involving relevant stakeholders in developing these guidelines and gathering data to effectively measure inflation.
He also highlighted the significance of avoiding deficit financing to address money supply issues.