The Governor of the Central Bank of Nigeria (CBN), Mr. Yemi Cardoso, has made it clear that the bank does not directly set the foreign exchange (FX) rate in Nigeria.
He emphasized that the exchange rate is determined by economic factors and market fundamentals. This clarification was made during a panel discussion at the launch of the Nigeria Development Update in Abuja.
During the event, Mr. Cardoso highlighted the importance of understanding how the FX rate is decided. “The CBN does not determine the exchange rate; it is determined by the fundamentals. The CBN will ensure that we adhere to that,” he said.
By this, he means that the exchange rate is influenced by the overall health of the economy, such as supply and demand, inflation, and international trade, rather than by any direct action of the central bank.
He also shared his commitment to follow traditional central banking practices, ensuring that the CBN focuses on its core mandate of maintaining monetary stability.
Mr. Cardoso is optimistic that with improved collaboration between the CBN and the country’s fiscal authorities, there will be more stability in the foreign exchange market.
The aim is to create a more predictable and stable exchange rate environment in Nigeria.
In addition to his comments on the exchange rate, Mr. Cardoso discussed recent successes in boosting foreign exchange inflows into the Nigerian economy.
He noted that when he assumed office, the country was receiving around $200 million in FX inflows. However, through determined efforts by the CBN and other authorities, inflows have now increased to approximately $600 million.
He believes this growth reflects a positive change in investor confidence in Nigeria. “Before, many potential investors were on the sidelines. Now, it’s amazing to see how many have stepped forward to invest in Nigeria,” he added.
The increase in FX inflows is a significant improvement for Nigeria’s economy, as it provides more foreign currency to support trade and investments.
Additionally, the country has seen a drop in inflation to 32.15% as of September 16, 2024, which is a positive indicator for economic stability.
