Forex Crisis: “We have transitioned from firefighting to strategic planning” – Cardoso

The Governor of the Central Bank, Olayemi Cardoso, has stated that the apex bank is no longer in “firefighting” mode and has now switched to strategic planning in its efforts to achieve forex stability.

This transition comes after six months of grappling with numerous economic challenges, including rampant inflation and volatility in the foreign exchange market.

He made this remark in a joint press briefing with the Minster of Finance and Coordinating Minister of the Economy, on the sidelines of the IMF/World Bank Spring Meetings held in Washington DC, United States.

What Cardoso is saying

Governor Cardoso highlighted that with the attainment of relative stability, particularly in the FX market, the focus of the CBN is now on enhancing the ease of doing business within Nigeria.

This strategic pivot aims to consolidate the recent gains by fostering an efficient and transparent market system, which in turn is expected to boost financial and economic inclusion for small businesses and households.

“In the six months since assuming the position of Central Bank Governor, the challenges have been significant, from grappling with inflation to addressing volatility in the foreign exchange market.

However, with relative stability now achieved, particularly in the FX market, we have transitioned from firefighting to strategic planning across key areas.”

Key initiatives include leveraging technology and remote banking solutions to decrease transaction costs and widen access to financial services.

These measures are part of a broader agenda to create a more resilient and inclusive economic framework, moving away from the emergency measures that previously dominated the central bank’s agenda.

Governor Cardoso emphasized the need for a sequenced approach to address ongoing and future challenges, ensuring the CBN works closely with stakeholders such as investors, banks, and businesses.

This collaborative effort underscores a renewed commitment to orthodox monetary policies, aiming to rebuild trust and confidence in Nigeria’s economic management and leadership.

On current exchange rate depreciation

Cardoso also responded to the current exchange rate depreciation experienced over the weekend as the naira weakened on the official and parallel market on Friday.

According to Cardoso, the weakness seems to be a volatility in the exchange rate and that Nigerians should “expect that there will increases, here and there, ups and down”, highlighting the fact that the Naira also rebounded during the weekend.

He also emphasized that the most important thing is that they are doing “everything possible to ensure that this is an exchange rate that finds adequate price discovery level” as policy reforms continue to take hold.

Cardoso touted the response from foreign portfolio investors as being “positive” and expects that the “positive sentiments will continue to improve” in terms of continuous investor inflows into the country.

He also reinforced the target of doubling diaspora remittances as a key policy focus in the short to medium term for the apex bank.

While the apex bank did not state the baseline for doubling the remittance targets, the World Bank estimates Nigeria’s diaspora remittances to be around $20.5 billion annually.