The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has described the Nigerian currency as “undervalued”.
Cardoso stated this Wednesday at the launch of the Nigerian Economic Summit Group (NESG) Macroeconomic Outlook Report 2024.
“We believe that the naira is currently undervalued and together with coordinated measures on the fiscal side, we will accelerate genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate,” he stated.
In recent years, the Naira has fallen against the United States dollar in both the official and unofficial markets.
As of Tuesday, the naira fell to N1,372 in the parallel market and N878 in the official market.
Cardoso said he is optimistic about the stabilization of the foreign exchange market, citing initiatives to attract more dollars and collaboration with the Ministry of Finance and NNPCL to improve foreign exchange flows and increase reserves.
“I am pleased to note our collaboration with the Ministry of Finance and NNPCL to ensure that all foreign exchange inflows return to the Central Bank. This coordinated effort will greatly improve the Bank’s foreign exchange flows and contribute to the accumulation of reserves.
“The expected stability in the foreign exchange market by 2024 can be attributed to the reduction in imports of petroleum products and the recent implementation by the CBN of a market-determined exchange rate policy,” he said.
He noted that the measure is designed to rationalize and unify multiple exchange rates, encourage transparency and reduce arbitrage opportunities.
The expected result is a consistent and stable exchange rate, which will increase investor confidence and attract foreign investment.
He said the CBN is actively implementing a comprehensive strategy to improve foreign exchange market liquidity over short, medium and long-term horizons.
“Our goal is to address fundamental issues that have hindered the effective functioning of our markets over the years,” he said.
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Cardoso highlighted the importance of maintaining the integrity of the financial market to inspire confidence and meet objectives.
With the completion of an independent forensic review and subsequent settlement of outstanding valid foreign exchange transactions, it assured the government’s commitment to promptly address any violations 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 allows for the fair determination of exchange rates, ensuring stability for both businesses and individuals,” he added. .