To restore the value of Naira at the foreign exchange market, Governor of Central Bank of Nigeria (CBN), Olayemi Cardoso, has admonished Nigerians to reduce their appetite for the United States Dollar (USD) and consumption of foreign goods.
Cardoso, who gave the advice during an interactive session with the Joint Senate Committees on Finance, Appropriations, Banking, Insurance and other Financial Institutions in Abuja, on Friday, said without moderation of demands on USD, the CBN has no magic wand to get Naira stabilised.
He, however, informed members of the legislative committee that a series of measures put in place by the apex bank recently were yielding results with inflow of about $1billion into the economy.
“The Nigerian foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the naira. Factors contributing to this situation include speculative forex demand, inadequate forex supply, increased capital outflows, and excess liquidity.
“To address exchange rate volatility, a comprehensive strategy has been initiated to enhance liquidity in the FX markets. This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs and IMTOs, enforcing the Net Open Position limit, Open Market Operations and adjusting the remunerable Standing Deposit Facility cap among others.
“Distinguished Senators, these measures, aimed at ensuring a more market-oriented mechanism for exchange rate determination, will boost foreign exchange inflows, stabilize the exchange rate, and minimize its pass-through to domestic inflation.
“Indeed, they have already started yielding early results with significant interest from Foreign Portfolio Investors (FPIs) that have already begun to supply the much-needed foreign exchange to the economy.
“For example, upwards of $1 billion in the last few days came in to subscribe to the Nigeria Treasury Bill auction of 1 trillion Naira which saw an oversubscription earlier this week.
“Our measures aimed at improving USD supply into the Nigerian economy, has significant potential in taming the volatility of the exchange rates. However, for these measures to be sustainable, we must as a country, moderate our demand for FX.
“It is also clear that the task of stabilizing the exchange rate, while an official mandate of the CBN, would necessitate efforts beyond the Bank itself. It will also include actions by corporates and individuals to reduce our frequent demand for the dollar for business and personal needs,” Cardoso stated.
On the high inflation rate, the CBN governor assured Nigerians that it will be reduced to 21.4% in 2024.
“Distinguished Senators, Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, aiming to rein in inflation to 21.4 percent at the medium term, aided by improved agricultural productivity and easing global supply chain pressures,” he said.
Besides the CBN Governor, top government functionaries like the Ministers of Finance, Wale Edun; Budget and National Planning, Senator Atiku Bagudu, and that of Agriculture and Food Security, Senator Abubakar Kyari, also made presentations based on questions asked by the lawmakers on the state of economy.
Chairman of the Senate Committee on Finance, Senator Sani Musa, raised different posers for the Ministers and CBN Governor, querying the $3.3billion collected as loan to rescue the Naira while expected positive outcomes were not being felt months after.
But, the chairman of the Senate Committee on Banking, Insurance and other Financial Institutions, Senator Tokunbo Abiru, in his remarks, told the CBN governor to ensure proper synergy between Monetary and Fiscal Policies of the government.
He specifically urged the CBN governor to make available to the Senate committee audited account of the apex bank and its 2024 budget.