The Central Bank of Nigeria (CBN) has reported that its efforts to address the economic challenges in the country are beginning to yield positive results. Olayemi Cardoso, the governor of the apex bank, shared this information on Friday during an appearance before the Senate Committee on Finance, Banking, Insurance, and Financial Institutions, alongside the economic team.
The Senate had summoned the economic team, which included the CBN governor, Minister of Finance Wale Edun, Minister of Budget and Economic Planning Atiku Bagudu, and Minister of Agriculture Abubakar Kyari, to discuss the current economic situation. The focus of the discussion was on the depreciation of the Naira and the rising prices of food items.
Addressing the concerns about the Naira’s free fall, Cardoso highlighted measures aimed at adopting a more market-oriented mechanism for determining the exchange rate. These measures, he explained, are intended to increase foreign exchange inflows, stabilize the exchange rate, and minimize its impact on domestic inflation. Cardoso noted early positive outcomes, with substantial interest from Foreign Portfolio Investors (FPIs) contributing to much-needed foreign exchange for the economy.
For instance, Cardoso mentioned that over $1 billion came in from FPIs in the last few days to subscribe to the Nigeria Treasury Bill auction of 1 trillion Naira, which experienced oversubscription earlier in the week. He emphasized that the measures to enhance the supply of US dollars into the Nigerian economy have the potential to reduce exchange rate volatility.
However, Cardoso stressed the importance of moderating the country’s demand for foreign exchange for these measures to be sustainable. The CBN’s efforts aim to strike a balance between market-oriented mechanisms and demand management to achieve a more stable economic environment.
