In a recent development, the Governor of the Central Bank, Yemi Cardoso, has asserted that the current valuation of the naira is undervalued. During the Nigeria Economic Group outlook for 2024 held via video conference, Cardoso outlined the Central Bank’s commitment to working towards a genuine price discovery in the foreign exchange market.
The apex bank, under Cardoso’s leadership, aims to implement inflation-taming policies through monetary instruments and collaborative efforts with the Ministry of Finance on the fiscal front. The Governor pledged to instill discipline in the forex market and promptly address any infractions or abuses.
“We believe that the naira is currently undervalued. 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,” stated Cardoso during his keynote address.
Despite the official market reporting the naira trading at N878.61, the unofficial market recorded a rate of N1360/$1. This underscores the challenges in maintaining a consistent valuation.
In addressing the concern of foreign exchange reserves, Cardoso highlighted collaborative efforts between the Central Bank, the Ministry of Finance, and NNPCL. The partnership aims to ensure that all foreign exchange inflows are returned to the bank, leading to an augmentation of the country’s foreign reserves.
Turning attention to inflation, the Governor pointed out that the anticipated resumption of operations in the country’s three refineries is expected to contribute to a reduction in the pump prices of Premium Motor Spirit (PMS), a significant contributor to the Consumer Price Index (CPI) basket.
“The outlook for decreasing inflation in 2024 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lower policy rates, stimulating investment, fueling growth, and creating job opportunities”, noted Cardoso.
As Nigeria navigates economic challenges, the Central Bank’s strategic initiatives and commitment to addressing currency concerns are expected to play a pivotal role in fostering a more stable economic environment. Investors and stakeholders will be closely monitoring these developments as the nation looks ahead to a transformative year in 2024.
Credit: NairaMetrics
