Business a.m
Yemi Cardoso, the governor of the Central Bank of Nigeria (CBN) has acknowledged that the naira is currently undervalued,assuring that the bank will prioritise real price discovery in the foreign exchange market in 2024, with the goal of establishing a more accurate and fair exchange rate for the Nigerian currency .
Cardosos stated this in a keynote address delivered via video conference at the Nigeria Economic Group outlook for 2024.
The CBN governor stated that the apex bank will work closely with the Ministry of Finance to implement policies aimed at reducing inflation. He also stressed the need for discipline in the forex market, promising to address any infractions or abuses that may occur.
In his words, “We believe that the naira is currently undervalued, And coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate”
Regarding the country’s foreign exchange reserves, Cardoso emphasised the importance of partnerships with the Ministry of Finance and NNPCL, Nigeria’s national oil company. He explained that all foreign exchange inflow should be returned to the Central Bank, as this will strengthen the country’s reserves and contribute to economic stability.
Cardoso also highlighted the potential impact of increased refinery operations on the price of PMS, which is one of the key components of the Consumer Price Index (CPI). The CPI is a key indicator of inflation in Nigeria, and a reduction in PMS prices would help to keep inflation under control. Additionally, Cardoso noted that a reduction in PMS prices would help to improve economic growth and make the cost environment more predictable.
In addition to the positive impact of refineries on PMS prices, Cardoso also predicted that inflation in Nigeria will moderate from its current level of 28.92 percent in December 2023.
“Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4 per cent,” he said.
Cardoso explained that the predicted decrease in inflation will have a positive impact on businesses, as they will benefit from a more predictable cost environment. He added that this stability will allow businesses to plan ahead and make better decisions about investing in new projects or expanding their operations.
