Mr. Yemi Cardoso, the Governor of the Central Bank, has acknowledged that the naira is currently undervalued and has pledged that the bank will work towards achieving genuine price discovery in the foreign exchange market throughout 2024. Cardoso outlined the central bank’s plans for the year during the keynote address at the Nigeria Economic Group outlook for 2024 via a video conference.
Cardoso stated that the Central Bank will implement inflation-taming policies through monetary instruments and collaboration with the fiscal side of the economy, represented by the Ministry of Finance. He emphasized the need for discipline in the forex market and assured prompt action against infractions or abuses.
“We believe that the naira is currently undervalued, And coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate,” Cardoso stated.
Cardoso highlighted the Central Bank’s partnership with the Ministry of Finance and NNPC on increasing foreign exchange reserves. He explained that all foreign exchange inflows would be returned to the bank, leading to the accretion of the country’s foreign reserves.
In addressing inflation, Cardoso mentioned the expected resumption of operations in the country’s three refineries, contributing to a potential reduction in Premium Motor Spirit (PMS) pump prices, a significant component of the Consumer Price Index (CPI) basket.
“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lower policy rates, stimulating investment, fueling growth, and creating job opportunities,” Cardoso added.
The Central Bank Governor’s statements reflect the institution’s commitment to stabilizing the naira’s value, enhancing foreign exchange reserves, and curbing inflation to foster economic growth and stability.
