Naira’s rally not from foreign reserve use, says Cardoso

 

Nigeria’s central bank governor,  Olayemi Cardoso has debunked claims that the recent gains of the Naira is the result of usage of the nation’s foreign reserves to bolster the local currency. 

Speaking at the on-going Spring Meetings of the IMF and the World Bank, Cardoso said that his team at the apex bank is determined to nurse a foreign exchange market ruled by the principle of willing buyers and willing sellers.

He also said that Ways and Means (federal government borrowings from CBN) is no longer an issue, particularly after the fiscal authorities securitised the outstanding.

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. 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.”

He said within two months of his administration , the Naira was adjudged the worst performing currency, but within six months it moved to the best performing currency, globally.

“Ultimately the objective is to ensure that we moderate inflation’’, he stated.

Key take-away lessons for him, he said, was that he could not over-emphasise the importance of trust, stating, “Irrespective of boldness to do certain things if the trust is not the there, you will sub-optimise.

“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.” vanguard .