CBN Governor Clarifies: No Reserve Defense for Naira, Emphasizes Market Dynamics

During the ongoing Spring Meetings of the IMF and the World Bank, Mr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), addressed concerns regarding the nation’s foreign reserves and the value of the Naira.

Contrary to speculations, Cardoso affirmed that the CBN is not intervening to support the Naira using the country’s foreign reserves. He emphasized the commitment of the apex bank to foster a foreign exchange market governed by the principle of willing buyers and sellers.

Addressing the recent decline in reserves, Cardoso clarified that the shift was primarily for settling obligations, rather than defending the Naira. He stressed the importance of maintaining foreign reserves for such purposes.

Cardoso underscored the collaboration between the CBN and fiscal authorities, indicating that Ways and Means, a federal government borrowing mechanism from the CBN, is no longer a pressing issue.

In efforts to bolster confidence in the Nigerian currency, Cardoso stated that he opted for orthodox central banking methods. Despite facing criticism for raising the monetary policy rate significantly, he asserted that the decisions were necessary for achieving desired outcomes, including moderating inflation.

Highlighting the importance of communication, Cardoso pledged to engage with Nigerians and stakeholders to manage expectations realistically. He expressed satisfaction with the outcomes of the measures taken under his administration, citing the Naira’s transformation from the worst to the best performing currency globally within a short period.

In reflection, Cardoso emphasized the crucial role of trust in policymaking and acknowledged the need for better understanding among the public regarding the CBN’s actions and objectives.