It is not our intention to defend naira, says Cardoso

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), on Wednesday addressed concerns regarding the defense of the naira during discussions on the sidelines of the ongoing International Monetary Fund (IMF)/World Bank meetings in Washington D.C.

Cardoso said that it is not the intention of the apex bank to defend the naira. During the governors’ talk, Cardoso made it clear, “Defending the naira, which seems to be the elephant in some room, I want to make it as clear as possible. It is not our intention to defend the naira.”

He further elaborated on the CBN’s stance, highlighting the preference for a market-driven approach to price discovery, emphasizing a vision where CBN intervention would be minimal except in extraordinary circumstances.

Cardoso stressed the importance of a vibrant currency market and ensuring sufficient liquidity, stating that interventions would continue to maintain market stability. He noted specific efforts to stimulate the Bureau de Change (BDC) segment and facilitate individuals’ access to funds for essential needs like education and healthcare.

Amidst discussions of taking “hard decisions,” Cardoso’s remarks underscored the CBN’s commitment to market dynamics and facilitating access to foreign exchange, rather than engaging in direct naira defense measures.

“What is important to us is there is sufficient liquidity in the market, which I have spoken about today, $1 billion is the outlier, sometimes $600, $700 million and that will continue. So as long as we have a vibrant currency market, why do we need to,” he said.

The governor’s statements come amidst recent discussions and speculations regarding Nigeria’s foreign exchange reserves and the CBN’s role in stabilizing the currency. Cardoso’s clarification provides insights into the CBN’s broader policy and philosophy regarding the naira’s value and exchange rate management.

He disclosed that about $600 million has flowed into Nigeria’s external reserves. “Money comes in, in a couple of days, yesterday and today, $600 million came into the reserves.”