The Central Bank of Nigeria, CBN, Governor, Olayemi Cardoso, has stated that the current exchange rate for the Naira does not reflect the true value of the Nigerian local currency.
Cardoso made the disclosure at the 59th Bankers Night organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.
Recall that currently, the Naira exchanges at N1,720 to Dollar at the parallel market. And below N1,663 to Dollar at the official window.
But speaking at the event, Cardoso said the current US Dollar exchange rate does not represent the true market value of the Naira. He noted that the price reflects what most desperate buyers are willing to pay.
The CBN boss, however, stated that the apex bank expects that the introduction of the electronic marketing system will correct these distortions. He noted that the system will enhance price discovery process for the Naira.
According to him, the move will significantly boost the Central Bank’s oversight and integration capabilities. And ensure a more stable and transparent foreign exchange market.
Cardoso noted that the exchange rate has since June been relatively stable. He, therefore, refuted disinformation circulating about a supposed demand supply gap in the FX market. Which he said was truly unnecessary.
The Governor also stated that an FX market defined solely by when and how the Central Bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigeria’s.
He said, “Now is the time for banks to step up to their intermediation and market making responsibilities. By providing customers with the right solutions to run their businesses and manage risk effectively.”
Speaking on interest rate hike, he said the interest rate cut will commence once inflation begins to show signs of decline.
The apex bank Governor also noted that inflation has shown signs of decline. Towards holding down the decline, he said CBN will take steps in 2025 to ensure that inflation decline is achieved.
The apex bank boss also warned that the CBN will begin to sanction banks for poor service quality. And failure to load cash at Automated Teller Machine (ATM) points will attract sanctions.
He noted that spot checks on banks will commence on December 1, 2025. And any bank found not meeting expectations, will be punished.
According to the Governor, banks have been fined N29 billion for regulatory breaches. He maintained that the apex bank will continue to ensure compliance by the financial institutions.
Cardoso noted that the market has also supported over $9 billion in capital outflows over the past year. This is even as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past.
He said, “We anticipate more diaspora remittances in the coming year. With a target of $1 billion monthly inflows from the diaspora.”
Cardoso pointed out that improving transparency, and strengthening the Central Bank’s credibility and public trust in policies enable businesses and investors to plan. He, therefore, reassures households that monetary decisions are made in their interests.
The Nation
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