Governor Olayemi Cardoso of the Central Bank of Nigeria (CBN) clarified yesterday that the apex bank is not deploying the nation's foreign reserves to support the Naira. His statement comes amid recent declines in Nigeria's foreign reserves, coinciding with a significant strengthening of the Naira in the foreign exchange market (forex), sparking speculations about the CBN's intervention.
Speaking at the ongoing Spring Meetings of the IMF and the World Bank, Cardoso emphasized his team's commitment to fostering a forex market driven by the principles of willing buyers and sellers. He debunked the notion of defending the Naira, stressing the importance of allowing the currency to perform independently within a vibrant forex market.
Addressing concerns about the shift in reserves, Cardoso clarified that the reserves were not utilized to bolster the Naira but rather to settle outstanding obligations. He underscored the fundamental purpose of foreign reserves as a means to meet financial obligations.
Furthermore, Cardoso highlighted the cooperation between the CBN and fiscal authorities, noting that the issue of Ways and Means (federal government borrowings from CBN) is no longer a concern following fiscal adjustments.
In terms of monetary policy, Cardoso outlined the CBN's efforts to build confidence in the Nigerian currency through orthodox central banking practices. He acknowledged the necessity of raising the monetary policy rate to address economic challenges effectively.
Looking ahead, Cardoso emphasized the importance of realistic expectations among Nigerians and stakeholders. He pledged to enhance communication efforts to keep the public informed about policy decisions and their rationale.
Reflecting on his tenure, Cardoso noted the shift in the Naira's performance from being the worst-performing currency to one of the best globally within a short period. He reiterated the CBN's objective to moderate inflation and underscored the significance of trust in fostering effective policy implementation.
In conclusion, Governor Cardoso emphasized the need for trust and understanding in navigating economic challenges, underscoring the importance of transparent communication to manage expectations effectively.
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