Cardoso Unveils His Immediate Agenda to Stabilize the Exchange Rate
The new Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, whose appointment was confirmed on Tuesday by the senate, has unveiled his immediate agenda to stabilize the exchange rate of the naira in the financial market.
He said his immediate priority would be the clearing of the backlog of unsettled foreign exchange obligations.
Cardoso, speaking while undergoing screening in the Senate, said he was still in the dark over the extent of the foreign exchange obligations, but said his immediate task was to attend to them.
According to him, it would be naive for Nigeria to expect any headway, if the issue was not addressed, and the confidence of investors not regained in Nigeria’s financial market.
He also promised to discontinue the unorthodox and monetary policies introduced by his predecessor, in order to strengthen the naira.
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However, He outlined the urgent need for a stable currency, the need to root out corruption, defend the integrity of Nigeria’s financial system, and
develop a fiscal strategy that would free up resources for investments in important sectors of the Nigerian economy.
Meanwhile, to some analysts, Nigeria needs to resolve the confusion in the foreign exchange market, with Chief Economist & Head of Research,
Middle East & Africa, Standard Chartered Bank, Razia Khan saying that a more liberalised foreign exchange market will be a key priority for the governor of the CBN.
According to her, “Tackling inflation and overseeing a transition to a better-functioning, more liberalised FX regime will be the key priorities for the governor.”
She explained: “Both will likely require substantial meaningful tightening, to restore confidence. As a first step on FX, a tighter monetary policy backdrop will be needed.”
She added: “As an almost simultaneous step, all autonomous supply (including from oil companies) should be allowed on the official FX market, to create more FX liquidity where it is most needed.
“Price-discovery on the official market – that is, more FX flexibility – will also be needed to reduce (hopefully once and for all), the importance of the parallel market,” she submitted.
