Cardoso Asserts Naira Undervaluation; Central Bank Initiates Efforts for Authentic Price Unveiling

Cardoso Asserts Naira Undervaluation; Central Bank Initiates Efforts for Authentic Price Unveiling

Governor Yemi Cardoso of the Central Bank asserts that the naira's current valuation is inadequate and assures that, in 2024, the institution will endeavor to achieve authentic price discovery within the foreign exchange market.

Cardoso made these declarations during his keynote address at the Nigeria Economic Group's 2024 outlook, delivered through a video conference.

In elucidating his strategy, Cardoso outlines the Central Bank's commitment to implementing inflation-mitigating policies utilizing monetary instruments and fostering collaboration with the fiscal facet of the economy, specifically the Ministry of Finance.

Additionally, he pledges to instill discipline within the forex market and promptly rectify any instances of transgressions and misconduct.

Expressing his perspective, Cardoso articulates, "We posit that the present undervaluation of the naira can be rectified. Coordinated actions, coupled with fiscal interventions, will hasten the attainment of genuine price discovery in the immediate future. This concerted strategy will contribute to a more equitable and steady exchange rate."

While the official market witnessed the naira trading at N878.61, as reported by Nairametrics daily FX monitor, the unofficial market recorded a value of N1360/$1.

Augmenting Foreign Exchange Reserves

Addressing the augmentation of foreign exchange reserves, Governor Cardoso underscores the collaborative efforts between the Central Bank, the Ministry of Finance, and NNPCL. He emphasizes that all foreign exchange inflows are systematically redirected to the bank, leading to the accretion of the nation's foreign reserves.

Curbing Inflation

Governor Cardoso also anticipates a reduction in pump prices of Premium Motor Spirit (PMS), a significant contributor to the Consumer Price Index (CPI), as the three refineries across the country are expected to resume operations.

He highlights that the inflation outlook aligns with the objective of fostering economic growth and establishing a more anticipatory cost environment.

In his words, "In 2024, we project a decline in inflationary pressures due to the Central Bank's inflation-targeting policy, aiming to curtail inflation to 21.4%."

"The envisioned reduction in inflation for 2024 will exert a profound influence on businesses, creating a more foreseeable cost landscape and potentially culminating in reduced policy rates. This, in turn, will stimulate investments, propel growth, and generate employment opportunities."