Nigeria’s Central Bank Governor, Yemi Cardoso says no regret in the decision of the apex bank to float the naira, insisting that such was necessary to determine the fair value of the currency to other top global currencies.
The “decision was necessary to bring the official exchange rate closer to market reality, “ Cardoso said at the weekend in Lagos during an event to mark his one year in office.
Addressing members of the Harvard Club of Nigeria in Lagos at the weekend on the topic: “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation,” Cardoso also disclosed that the apex bank has ensured transparency in the nation’s foreign exchange market.
Speaking at the weekend, on various policies implemented since becoming the apex bank governor last year Cardoso, said the CBN has achieved its target of ensuring a fair exchange rate for the naira, adding that it was an unpopular decision among key stakeholders in the country.
According to him, “Floating the naira, a decision met with considerable public criticism, was necessary to bring the official exchange rate closer to market reality. The disparity between the official and parallel rates had encouraged arbitrage and speculation, eroding trust in the market.”
He explained that the CBN has brought back sanity in the forex market.
He said,“By enhancing transparency and providing more accurate oversight of forex transactions, we send a strong signal that the CBN is serious about fair and efficient markets.”
The apex bank governor was appointed by President Bola Ahmed Tinubu in October last year, and one of the tasks assigned to him by the president is the stabilisation of the naira.
One year after, according to financial experts, the apex bank under Cardoso has failed to accomplish this task as the naira has experienced a continuous hit in terms of its exchange rates to other global currencies, particularly the American dollar.
Within the period, the naira has fallen by over 200 percent, according to analysts, from barely N500 to N1,700 to the American greenback with no hope of fast recovery.
Experts insist that keys steps required to turn the fortune of the currency around has yet to be critically addressed by the managers of the economy.
They insist that though the nation’s forex reserves, one of the key requirements to stabilsie the naira has slightly increased in the last few months to barely $37 billion, other factors such as ramping up crude oil (the nation’s major forex earner) sales to earn hard currency has yet to be fully addressed.
The current daily crude oil sales stand at below 1.2 million short of the required two million barrel a day.
Experts also cited the bureau de change, BDCs operators in the country as one of the threats to the stability of the naira.
Recall that Cardoso had earlier disclosed that the naira was undervalued, promising to ensure “genuine price” for the currency.
Cardoso said, “We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” he said in January this year.
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