$1bn came into the market in past few days - Cardoso defends CBN policies

The Governor of the Central Bank of Nigeria (CBN), Olayemi (Yemi) Cardoso, has defended the recent measures taken by the apex bank to stabilise the exchange rates, saying they've started yielding positive results.

While addressing the Joint Senate Committee on Finance, Banking, Insurance and Financial Institutions during a briefing on Friday, February 9, 2024, Cardoso disclosed that $1bn has come into the Nigerian market in the past few days through the CBN interventions.

He said that these measures would help stabilise the foreign exchange rates and reduce the distortion that high exchange has on inflation, as they are closely related.

The committee summoned the CBN governor on January 31, 2024, following pressing concerns about the state of the economy and the continued downward spiral of the naira in the forex exchange market.

The naria slumped to an all-time low sometime last week, exchanging for ₦1,490 against the USD in the parallel market.

The development prompted the CBN to introduce measures to halt the slide, including a directive to Deposit Money Banks (DMBs), ordering them to sell their excess dollar stock, latest February 1, 2024.

“We have already begun to see shifts in the positive direction. Indeed, they (CBN measures) have already started yielding early results with significant interest from foreign portfolio investors, which was a concern. That has already begun to supply the much-needed foreign exchange to the economy.

“For example, upward of the past few days, we have had over $1 billion that has come into the market, and this quite frankly has answered the question of if our policies are working,” Cardosos told the lawmakers.

The CBN governor stressed that the numbers available have shown that the market has responded positively to the policies they've put in place, adding that the measures have significant potential to tame the exchange rate volatility and, in turn, moderate inflation.

However, he warned that for these measures to be sustainable, Nigeria must moderate its demands for foreign exchange.

Though he said the CBN is working hard to restore credibility to the apex bank, Cardoso maintained that the demand for US dollars remains the genuine issue impacting the exchange rate.

The CBN chief expressed confidence that inflation will decline this year using the inflation targeting framework and moderating to 21.1%.