CBN Governor Clarifies Stance On Foreign Reserves And Naira Value

CBN Governor Clarifies Stance On Foreign Reserves And Naira Value

Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has addressed concerns regarding the recent decline in Nigeria’s foreign reserves and the corresponding appreciation of the Naira in the foreign exchange market (forex). Contrary to speculations, Cardoso emphasized that the CBN’s objective is not to defend the Naira using the nation’s foreign reserves…..READ ALSO CBN Reduces Banks’ Loan-To-Deposit Ratio To 50%

Speaking at the ongoing Spring Meetings of the IMF and the World Bank, Cardoso clarified that the CBN’s focus is on fostering a vibrant forex market to allow the Naira to perform independently. He stressed that the decline in foreign reserves is primarily for settling other financial obligations rather than defending the Naira.

Cardoso highlighted the importance of maintaining a vibrant forex market to facilitate access to foreign currency for essential needs such as school fees and travel expenses. He attributed the recent shift in foreign reserves to fulfilling obligations that have fallen due, reiterating that the primary purpose of foreign reserves is to address such financial commitments.

Additionally, Cardoso emphasized the need for collaboration between the CBN and fiscal authorities, indicating that monetary policy alone is insufficient to address economic challenges. He noted that the CBN is cooperating with fiscal authorities, and issues such as food inflation are beyond the purview of the central bank.

Regarding the management of Nigeria’s currency, Cardoso mentioned his decision to adopt orthodox central banking practices to build confidence in the Nigerian currency. He assured stakeholders that the CBN remains committed to ensuring a stable forex market and promoting the independence of the Naira.

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