• Thursday, February 29, 2024
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BusinessDay

Exchange rate tops expectations for new governor

Nigeria central bank to sanction fraudulent forex claims, governor says

A stable exchange rate is expected to be the number one priority of Olayemi Cardoso, the newly appointed governor of the Central Bank of Nigeria (CBN), according to economists and analysts.

The appointment made by President Bola Tinubu on Friday has been described as a welcome development by most of the analysts polled by BusinessDay.

“The likelihood that we will now see several changes at the CBN with the governor and deputy governor nominations will be interpreted by markets to suggest that the government’s reform agenda will be given priority in the weeks ahead,” Razia Khan, managing director and chief economist, Africa and Middle East Global Research at Standard Chartered Bank, said.

She said for now, markets will lean to seeing this as boosting the likelihood of meaningful foreign exchange liberalisation, and it will be seen as a credit positive.

Read also:Emefiele resigns as CBN governor paving way for Cardoso’s appointment

Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said the shake-up in the CBN did not come as a surprise, adding that Tinubu hinted during his inaugural speech that the Central bank needed a thorough housecleaning. “That is what is playing out now,” he said.

According to him, under the previous CBN leadership, there were serious issues around the transparency of foreign exchange management as well as the intervention funds of the central bank.

Yusuf said the failure of the CBN to publish audited accounts for six years was also a major breach of corporate governance values and the CBN Act.

“Cardoso is eminently qualified for the position. He has the academic, intellectual and industry credentials to head the apex bank,” he said.

Uche Uwaleke, professor of Capital Market at the Nasarawa State University Keffi, said: “It is a welcome development. Cardoso is eminently qualified. The CBN is too sensitive an institution to allow a chief executive function in an acting capacity for a long period. A substantive CBN governor sends the right signals to financial markets.”

He said his major challenge will be the management of the exchange rate.

“Great appointments. I expect the new team to implement policy that will lead to stable FX rate and bring down inflation rate,” said Ayodele Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank Limited.

Nigeria’s currency on Friday fell to a record low of N955 per dollar as demand for the greenback intensified at the parallel market, popularly called black market.

At the Investors’ and Exporters’ (I&E) forex window, Nigeria’s official FX market, the naira fell by 2.88 percent as the dollar was quoted at N780.00 on Thursday compared to N758.12 on Wednesday and weaker than N742.10/$1 quoted on Tuesday, data from the FMDQ indicated.

Charlie Robertson, head of macro strategy at FIM Partners UK Ltd, applauded the appointment, saying it would help improve investor sentiment towards Nigeria.

Read also:Cardoso takes helm of CBN as FX backlog lingers

Onoja Usman, managing director/CEO of Lovonus Microfinance Bank Limited, said: “It is a welcome development; the president took time to nominate somebody with a good track record and we believe the man will perform.”

Aminu Gwadabe, national president of the Association of Bureau De Change Operators of Nigeria, said having substantive management in place will give credibility and confidence to Nigerians and the international community.

“We expect to see calmness and less uncertainties in the market that will douse the pressure in the market and likely the stability of our local currency.”

He advised the new management team to hit the ground running and engage the relevant operators/stakeholders for the way forward in policy design and implementation and shift from the knee-jerk policy stand of the last management.