Cardoso Reveals Plan To Stop Naira’s Helpless Slide

Cardoso Reveals Plan To Stop Naira’s Helpless Slide

Yemi Cardoso, the newly appointed Governor of the Central Bank of Nigeria (CBN), is set to implement immediate measures aimed at restoring the eroding confidence of foreign investors in the Nigerian economy.

The primary objective is to stem the steep decline of the naira against the dollar.

The plan hinges on two key strategies.

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First, there is an intention to address the large backlog of outstanding dollar obligations, which is anticipated to alleviate the sustained pressure on the naira. This would also relieve strain on the foreign exchange operations that have been hampered by speculative demand for the dollar.

Secondly, there is a commitment to ensuring strict compliance with all regulations governing transparency and accessibility in the foreign exchange market, a pledge that Cardoso, the former Chair of Citibank Nigeria, has emphasized.

Speaking before senators during his screening in Abuja, Cardoso acknowledged the presence of unsettled obligations within the central bank, and stressed the need to verify their authenticity and magnitude. He emphasized the importance of addressing this aspect of the foreign exchange market.

This stance aligns with the recent remarks of Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, who highlighted that Nigeria’s outstanding forward payment of $6.8 billion must be cleared for the naira to stabilize.

As of Tuesday, the naira hit a record low of 1,006 to a dollar on the parallel market. In official markets, it closed at 755.1, showing a 2 percent gain against the US currency.

The recent devaluation of the naira, which occurred shortly after President Bola Tinubu took office in May, aimed to unify multiple exchange rates and restore investor confidence. However, the parallel market rate has since diverged from the achieved parity in mid-June by at least 58 percent.

While some analysts express concerns over Cardoso’s commercial banking background for a central banking role, Cardoso affirmed his commitment to sound monetary policies focused on macroeconomic objectives during his screening. He emphasized that central banking is about policy-making and not profit-seeking or marketing.

Adams Oshiomhole, the senator representing Edo North Senatorial District, raised the issue during the screening, to which Cardoso responded by asserting his dedication to upholding the integrity of his role. He reassured that he would not compromise his reputation for anything.

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