Photo Caption:Yemi Cardoso,CBN Governor
The Governor of Nigeria’s Central Bank (CBN), Olayemi Cardoso has expressed cautious optimism regarding the recent stability of the naira.
In a Tuesday interview with Bloomberg TV, Cardoso noted the unprecedented calm the naira has experienced in recent months and suggested that the worst of its volatility may be over.
“I do believe that we have more or less seen the worst in terms of volatility,” Cardoso remarked. He emphasized the Central Bank’s commitment to monitoring market operations and utilizing various tools to ensure optimal value.
Cardoso attributed the naira’s stability to several interventions implemented by the CBN and assured that the country’s monetary policy committee (MPC) is determined to curb inflation, which reached a 28-year high of 33.95 percent in May.
In recent weeks, the naira has traded within a narrow range of 1,473 to 1,485 per US dollar in the official market, leading to its lowest 10-day rolling volatility in a year and the least 100-day swings since November, as reported by BusinessDay.
This stability is seen as a significant achievement for the reforms initiated by President Bola Tinubu’s administration and the Central Bank’s interventions. In May, the CBN raised its key interest rate to a record 26.25 percent, aiming to attract dollar inflows, reduce volatility, and control inflation.
The monetary authority’s strategy includes a cumulative 750 basis points of interest rate hikes this year, combined with substantial naira liquidity mop-up through regular bond sales and increased dollar inflows from external lenders. Analysts credit the naira’s rare calmness to these fresh foreign exchange inflows.
Notably, Nigeria received about $5.95 billion from the World Bank and Afreximbank, bolstering the country’s external reserves and supporting the naira’s value. As a result, Nigeria’s foreign currency reserves rose to $33.58 billion as of June 19, 2024, according to Central Bank data.
Cardoso’s optimistic outlook reflects confidence in the CBN’s measures to stabilize the naira and maintain economic stability amidst challenging conditions.
Global Financial Digest
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