Yemi Cardoso Senate Confirmation: Yemi Cardoso, who recently secured Senate confirmation as the Governor of the Central Bank of Nigeria (CBN), along with his deputies, has proposed a “reset” for the apex bank as the Nigerian naira experiences an all-time low, reaching 1,000 naira per dollar on the parallel market.
The Nigerian currency has been under pressure due to increased demand for dollars caused by a shortage of dollars, primarily due to reduced inflows from oil receipts and foreign capital.
Since the beginning of the year, the naira has lost 35.50 percent of its value against the dollar, plummeting from 738 naira per dollar on the parallel market.
limited access to foreign exchange
Despite the exchange rate unification in June, foreign exchange inflows into Nigeria have been insufficient. Meanwhile, the demand for foreign currency remains high, resulting in pressure on the exchange rate. Additionally, limited access to foreign exchange in the official market has incentivized players to purchase foreign exchange in the black market.
Cardoso’s immediate priority is to find aggressive ways to offset significant foreign exchange obligations as part of measures to combat the ongoing depreciation of the naira, which has become a significant burden on the economy.
He also promised to pull back from aggressive development finance, promote transparency, compliance, and collaboration, and maintain a zero-tolerance approach to violations of the CBN Act.
Cardoso’s leadership will prioritize transparency
Cardoso emphasized the need to refocus the CBN on its core functions, reverse to evidence-based monetary policies, and establish an open, transparent, and rule-based system.
Regarding the naira’s freefall, Cardoso outlined immediate and short-term measures, emphasizing the importance of achieving exchange rate stability. He pointed out that short-term measures are particularly crucial, and addressing operational issues, including verifying the authenticity of unsettled foreign exchange obligations, is a priority.
The CBN under Cardoso’s leadership will prioritize transparency, compliance, and collaboration to attract serious foreign investors. An open and transparent system with well-understood rules will be crucial to building investor confidence.
Additionally, Cardoso stressed the importance of compliance with the CBN Act and implementing its provisions rigorously. The central bank will adopt a zero-tolerance approach to compliance abuses, ushering in a cultural shift and change in mindset.
Cardoso stressed the importance of compliance with the CBN Act
Nigeria’s real GDP growth for the second quarter of 2023 remained weak, driven by the non-oil sector, while the country’s external reserves trended downwards due to the CBN’s continuous intervention in the Investors’ and Exporters’ (I&E) FX window. High demand for foreign currency for imports and service payments, weak confidence leading to limited investment inflows, and oil theft affecting crude oil sales have contributed to the pressure on external reserves.
With Yemi Cardoso as the new CBN Governor, investors and stakeholders are eagerly awaiting his management and repositioning of the CBN to achieve key goals such as price stability, exchange rate stability, and financial stability. Key areas of interest include Cardoso’s views on interest rate management, exchange rate management, cryptocurrency, the true state of reserves, and the CBN’s role in government financing and development financing.
Yemi Cardoso Senate Confirmation; Investors and analysts expect a pragmatic and engaging CBN Governor who will work to gain the confidence of investors and stakeholders.
Source and visit thedailycourierng for more news update