The newly appointed Governor of Nigeria’s Central Bank, Yemi Cardoso, has revealed his plans to rebuild trust among foreign investors and curb the devaluation of the Naira against the US Dollar. His approach hinges on two main strategies aimed at alleviating pressure on the Naira and promoting transparency in the foreign exchange market.
One of the key strategies involves addressing outstanding dollar obligations, which have contributed to the Naira’s depreciation. By clearing these obligations, Cardoso hopes to stabilize the foreign exchange market, which has been strained by speculative demand for the US Dollar.
The second measure focuses on enforcing compliance with rules that promote openness and transparency in the foreign exchange market. Cardoso aims to make the market more attractive and reliable for investors.
During his screening in Abuja, Cardoso acknowledged the existence of unsettled obligations by the central bank, emphasizing the need to verify their authenticity and extent. He stressed that addressing this aspect of the foreign exchange market is a top priority.
Wale Edun, the Minister of Finance, previously stated that clearing Nigeria’s outstanding forward payment of $6.8 billion is crucial for Naira stability.
As of Tuesday, the Naira hit a record low of 1,006 to a US Dollar in the parallel market, while the official exchange rate closed at 755.1 Naira per US Dollar, marking a 2 percent gain against the US currency. Nigeria had devalued its currency by 40 percent shortly after President Bola Tinubu’s inauguration in May.
Some analysts have expressed concerns about appointing a CBN governor with a commercial banking background, rather than someone with central banking experience. However, Cardoso reassured senators that he would prioritize sound monetary policies and macroeconomic objectives, emphasizing his commitment to maintaining the integrity of the institution.
