The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, stated that the country recorded a total foreign exchange inflow of approximately $24 billion in the first quarter of 2024.
Cardoso disclosed during an interview with Bloomberg TV on Tuesday in London that Nigeria recorded a $24 billion foreign exchange inflow in Q1 2024, about 50% higher than in previous quarters up to 2021.
He stated that excessive naira volatility is over, citing the positive impact of the CBN’s monetary policies on the forex market. He also noted that inflationary pressure, currently at 33.69%, has begun to decrease due to these measures.
In a 20-minute interview, Cardoso noted a slowdown in month-on-month inflation rates, calling it a positive development. He assured that the Monetary Policy Committee remains vigilant in monitoring and moderating inflation trends.
“The MPC has been very clear in stating that they see inflation as a major impediment to the future of Nigeria and would do everything possible to ensure that they keep inflation in check and bring it down as reasonably as they can. I don’t see that changing. So far from what we’re seeing, there’s a deceleration in inflation rates, which is good news. And my intuition is that with the measures that have been taken in the recent past, and with the confidence of the MPC members to watch the interest rate trajectory very closely. We should see a continuation of the moderation in the inflation rate.
“Again, let’s watch the numbers but my intuition is that the MPC is determined to ensure that they put inflation in control.
“Data will direct whether they see further hikes or not. The MPC has been very clear in stating that they see inflation as a major impediment to the future of Nigeria, and they will do everything possible to ensure that they keep inflation in ch and k bring it down as reasonably as they can and I don’t see that changing.”
“Let’s not forget that the MPC is an independent-minded group of people who deal with data. So, what I will say is that depending on what data they see at a particular point in time will direct how they see the hikes or not,” he added.
On the exchange market stability, Cardoso, the former Lagos Commissioner for Finance, expressed satisfaction with the bank’s progress in stabilizing the naira. He mentioned that the CBN would continue measures to reduce rates and that the worst of the naira’s fluctuations is over.
Cardoso’s optimism is based on the CBN’s multi-pronged approach to stabilizing the naira. Before recent interventions, speculation and manipulation in the FX forward contract market were contributing to naira volatility.
“We do believe that we have more or less seen the worst in terms of volatility. You recall that months ago when I assumed office in September of 2023, we did have a crisis on our hands and the naira was, you know headed in a direction that everybody didn’t like.
“There was a lot of fear, panic, loss of confidence and trust. And it was vitally important that we addressed those issues of confidence and trust. We are relatively pleased with how far we have gotten up to now. In the past two, or three weeks, after a period of volatility, we have seen a lot of stability in the market and there has hardly been any movement in the currency.
“Several things were done, which included appreciating the fact that there were a lot of distortions within the foreign exchange system that did not give people the confidence to want to invest or want to keep their money in Naira. Everybody exchanged into dollars and held dollars and we addressed those issues using a flurry of different circulars, addressing some to the banks and some to the operations of the system itself. One of which is the fact that more confidence was going to come back into the market. A lot of inflows have come back because there’s very little liquidity at the time.
“In terms of liquidity, especially on the foreign exchange side, we have seen an increase. The first quarter of this year has resulted in a total inflow of about $24bn. Now, this is almost about 40 to 50 per cent more than the quarters up to about 2021.”
Cardoso noted that the rise in FX liquidity in the first quarter of 2024 is the highest in any quarter since 2021.
“The tools are having a positive impact. So we believe that continuing on this trajectory, we believe that liquidity will continue to grow,” he noted.
In the interview, Cardoso mentioned that the CBN has established a committee to boost the inflow of diaspora funds into the official FX market.
This committee, reporting directly to him, aims to double foreign exchange inflows from international monetary operations. He noted that the committee’s efforts have already led to increased inflows from Nigerians in the diaspora.
“We’ve had a recognition of the huge role the Nigerian diasporans play in remitting tremendous amounts of money into the system over some time.
“We set up a committee which reports directly to me to double the amount of foreign exchange inflow coming from the IMTO who service that segment the autonomous players.
“Capital inflows are very important. And the reason why it is is that in the case of Nigeria, the pass-through from the foreign exchange rate into inflation is quite significant. We believe that this is an area outside of the normal day-to-day operations that NNPC and exporters will help in closing the gap.
“Already, it’s beginning to bring about results. Again, we are confident that with these kinds of measurements, liquidity will increase in our market,” Cardoso added.
Get instant and latest news updates via Our WhatsApp Community or Google News online channel.
