The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardosohas clarified that the apex bank is not using the nation’s foreign reserves to defend the Naira.
His statement comes amidst concerns over the recent decline in Nigeria’s foreign reserves coinciding with a significant appreciation of the Naira in the foreign exchange market (forex).
Addressing attendees yesterday at the ongoing Spring Meetings of the IMF and the World Bank, Cardoso emphasized that the CBN is committed to fostering a foreign exchange market governed by the principles of willing buyers and willing sellers.
Cardoso also noted that the issue of Ways and Means, which involves federal government borrowings from the CBN, is no longer a concern, especially after fiscal authorities took steps to securitize the outstanding borrowings.
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His words, “Defending the Naira, from every indication is an elephant in some rooms. I will make this as clear as possible. It is not our intention to defend the Naira. Much as I have read in the recent few days some opinions about what has happened in terms of our reserves being drawn down, the CBN Defending the Naira, if you take your mind to our philosophy and policy, you will see it will be counter intuitive. We want the Naira to perform independently as long as we have a vibrant forex market.
“Initially we needed to keep the BDCs going. So it is important for people to get forex for school fees, travels and the like.
“The shift you see in our reserve is not to defend the Naira but for things like settling obligations that fell due. Mind you, that is the reason for keeping foreign reserves, in the first place.”
Cardoso also said that his team is cooperating with the fiscal authorities and that, “Ways and Means is no longer an issue.
He said, “Let me be upfront in saying that the monetary policy is only one side. It is very clear to us that we need to have a very good handshake with the fiscal authorities.
“For instance, food inflation is not within the purview of the CBN. Ways and Means is now less an issue.”
“Within two months of taking office, the naira was considered the worst performing currency globally. Within six months, it became the best performing.”
“Ultimately the objective is to ensure that we moderate inflation’
“It is a bit of a surprise that one had expected a greater understanding of a lot of the issues, expectations of the people on the CBN is often misplaced.” He added
