Governor of the Central Bank of Nigeria (CBN) Mr. Olayemi Cardoso has said that the naira is currently undervalued saying that the bank is making efforts to ensure that the local currency is adequately priced.
The naira which settled at N878.61 to the dollar on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), also berthed at N1,365/$1 on Tuesday at the parallel market.
In a keynote address delivered during the launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report, 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.
“This coordinated approach will contribute to a more balanced and stable exchange rate.We are implementing a comprehensive strategy to improve liquidity in our FX markets in the short, medium, and long term. “
According to him, in CBN’s efforts to stabilize the exchange rate, it is imperative to prioritize transparency and create a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike.
He said the reforms being undertaken by the federal government and the apex bank are already witnessing positive outcomes, and these will undoubtedly become more apparent in the near future.
The dedicated and relentless efforts being made are certain to bring about significant and positive changes for our economy.
He said the price of rice in the market or the cost of Foreign Exchange (FX) needed for businesses or to pay children’s school fees are reducing and that remaining concerns will be addressed shortly.
He expressed delight at the collaboration with the Ministry of Finance and the NNPCL to ensure that all FX inflows are returned to the Central Bank.
This coordinated effort will greatly enhance the Bank’s FX flows and contribute to the accretion of reserves.
“The expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN.
“This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage.
The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors Cardoso said.
According to the CBN governor, the Services sector is expected to maintain its dominance, driven by mobile money adoption, increased Government partnerships, and expanded digital lending offerings. Continued digitisation and Government support for financial inclusion initiatives according to him, are poised to drive growth in the fintech sector in 2024.
“The agriculture sector is expected to grow at a faster pace due to improved productivity and efficiency resulting from the projected decline in inflation, access to finance, and infrastructure investments. “Anticipated growth in the industry sector is tied to the expected increase in crude oil production, arising from improved surveillance and infrastructure, better maintenance of plants, and increased investments in the oil sector, “ Cardoso stated.
He said it is important to highlight that the NESG’s Macroeconomic Outlook Report for 2024 emphasizes the necessity of economic transformation under the central theme, “Economic Transformation Roadmap: Medium-Term Policy Priorities.”
This theme according to Cardoso, underscores the requirement for a clearly outlined roadmap comprising distinct yet interconnected phases
and essential policy recommendations.
“This resonates with me as we have just last week, launched a new 5 year Strategy for the Central Bank of Nigeria for the period 2024-2028 that provides a clear roadmap for achieving our mandates anchored on Price Stability and Monetary Policy Effectiveness among others,“ he stated.
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