According to Cardoso, the Naira has been steady since June.
Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), claimed that despite difficulties in the local and international economies, the value of the naira has demonstrated exceptional stability since June 2024. Cardoso stressed that the central bank’s efforts to control the currency and stabilize prices had started to show results after the 298th meeting of the CBN’s Monetary Policy Committee (MPC) in Abuja on Tuesday.Cardoso distinguished between the two ideas at the briefing and acknowledged the significance of discussing the naira’s stability and value.
Although a number of macroeconomic factors affect a currency’s value, the CBN’s main objective is to maintain its stability, which is essential for economic growth and planning.
Value above stability
Cardoso clarified that the CBN has always prioritized preserving the naira’s stability, which he said is crucial for creating an atmosphere that supports investment and economic planning.”The Central Bank of Nigeria exists to provide stability,” he stated. Planning is aided by stability. We make every effort to use all of the resources at our disposal, which include penalties for misbehavior and a variety of other measures to maintain stability. Now, if you examine and gauge stability from June to the present, you discover that it has remained steady. It has remained steady. The value of the currency has remained steady.
The governor of the CBN claims that, despite some pressure from both internal inflationary trends and international economic uncertainty, the naira has stayed stable since June 2024.
Cardoso pointed out that intentional initiatives meant to lessen currency volatility and establish a more stable economic climate are directly responsible for this period of stability.”The central bank can effectively manage the volatility around these factors, but it cannot control the fundamental drivers of the currency’s value, such as supply and demand dynamics, fiscal deficits, and the country’s balance of payments,” the CBN governor noted.
Economic fundamentals and policy initiatives
Cardoso said the central bank has used a mix of strategic policy tools and interventions to manage the stability of the naira.These include resolving supply-side bottlenecks, like difficulties with diaspora remittances and foreign capital inflows, that once impeded the flow of foreign cash into the nation. Cardoso emphasized that the CBN had improved these channels significantly, which led to a consistent rise in reserves.
Additionally, he clarified that the CBN’s policies were responsible for the notable improvement in Nigeria’s foreign exchange reserves.
Despite these advancements, Cardoso emphasized that reserves are essential for protecting the economy during unanticipated crises like the COVID-19 epidemic, which was a previously unheard-of worldwide shock, and not only for acting as a buffer against economic shocks.
Cardoso warned that although the central bank can reduce currency volatility, it has little control over the underlying economic principles that determine a currency’s actual value. The strength of the naira is influenced by a number of important factors, including Nigeria’s fiscal policy, balance of payments, and dependence on imports.
The argument in favor of import substitution
In this regard, Cardoso called for Nigerians to back laws that would lessen the nation’s dependency on imports. In an attempt to boost the value of the naira, he recommended that Nigerians give preference to domestically produced goods over those from other countries.
The governor of the CBN expressed hope that the nation’s continuous attempts to diversify its economy, especially through import substitution and trade policies that encourage domestic production, will lessen reliance on imports.
This could therefore help to stabilize the naira and reduce the strain on the foreign currency market.
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