Naira Free Fall: What We Are Going To Do – Cardoso

Olayemi Cardoso, the newly appointed Governor of the Central Bank of Nigeria (CBN), has revealed his comprehensive plans to address the ongoing challenges in the country’s foreign exchange (FX) market and tackle inflation. This announcement comes as Cardoso and four CBN deputy governor nominees faced a screening process by the Senate on Tuesday.

Nigeria’s FX market has been grappling with substantial volatility since the inception of President Bola Tinubu’s government. The recent fluctuations in the exchange rate have been a cause for concern, with the local currency’s gains on Monday being swiftly reversed as the naira plummeted to an all-time low of N1,000 to the US dollar on Tuesday.

Governor Cardoso highlighted that if their nominations are confirmed, the immediate focus would be on stabilizing the naira. He emphasized two key areas of action to achieve this goal. Firstly, addressing what he referred to as an ‘operational issue,’ which involves scrutinizing unsettled obligations held by the CBN, regardless of their magnitude. Cardoso stressed the importance of verifying the authenticity and extent of these obligations. Secondly, he highlighted the necessity of implementing transparent and comprehensible rules in the FX market to facilitate participation by foreign investors and portfolio investors. Cardoso underscored the significance of engaging with all stakeholders to establish guidelines that promote transparency and understanding among market participants.

In addition to addressing FX market challenges, Governor Cardoso outlined the CBN’s approach to combat inflation. He emphasized the importance of evidence-based policies and stated the need for a significant overhaul of the CBN’s data infrastructure. Enhancing data gathering capabilities is deemed essential in effectively measuring inflation rates. Furthermore, Cardoso highlighted the significance of avoiding deficit financing to address issues related to money supply, which plays a pivotal role in controlling inflationary pressures.

As Cardoso and his nominated deputy governors await confirmation, these outlined strategies aim to instill stability in Nigeria’s FX market and curtail inflation, which are pressing concerns for the nation’s economic stability.