CBN’s Cardoso Explains Critical Factors Behind Foreign Exchange Rate Movements

CBN’s Cardoso Explains Critical Factors Behind Foreign Exchange Rate MovementsThe Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has clarified that the country’s foreign exchange rates are primarily driven by economic fundamentals, not solely determined by the apex bank.

During his address at the launch of the Nigeria Development Update in Abuja on October 17, Cardoso emphasized adherence to traditional central banking principles. “The CBN does not set the exchange rate; it is dictated by economic fundamentals, and we will ensure that this principle is upheld,” he stated.

Cardoso expressed optimism that enhanced collaboration with fiscal authorities would contribute to greater stability in the exchange rate. He also noted efforts to boost foreign exchange inflows into the Nigerian economy, stating, “When we started, FX inflows were around $200 million, but now we’re seeing $600 million.”

He highlighted the positive shift in investor confidence, mentioning, “Previously, many potential investors were hesitant, but now we’re witnessing a significant increase in those ready to invest in Nigeria.”

In July, Nigeria’s foreign exchange reserves rose to $34.7 billion, an increase of $110 million from the previous day’s figure of $34.5 billion, according to CBN data. This growth has been attributed to various factors, including rising oil prices, improved remittances from the diaspora, and the CBN’s stabilization efforts.

Analysts view the increase in foreign currency reserves as advantageous for Nigeria’s economy, providing protection against external shocks and enhancing the nation’s ability to meet its financial obligations. A recent report from Fitch Ratings also highlighted Nigeria’s economic reforms, which have improved macroeconomic stability and policy consistency.

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