In a virtual address to the Nigeria Economic Group, the Governor of the Central Bank, Mr. Yemi Cardoso, outlined the bank’s plans for 2024, emphasizing a concerted effort to address the undervaluation of the national currency and achieve genuine price discovery in the foreign exchange market.
Undervaluation Acknowledged: Governor Cardoso candidly acknowledged the undervaluation of the naira, asserting that the Central Bank will collaborate with the Ministry of Finance to implement coordinated measures. The aim is to expedite genuine price discovery in the foreign exchange market, fostering a more balanced and stable exchange rate.
Discipline in the Forex Market: To instill discipline in the forex market, Governor Cardoso pledged to promptly address any infractions and abuses, signaling a commitment to fairness and order within the foreign exchange system.
Focus on Foreign Exchange Reserves: The Central Bank aims to boost foreign exchange reserves through strategic partnerships with the Ministry of Finance and the Nigeria National Petroleum Corporation Limited (NNPCL). This collaborative effort is designed to ensure that all foreign exchange inflows are returned to the bank, contributing to the accretion of the country’s foreign reserves.
Inflation-Taming Policies: In the pursuit of economic stability, the Central Bank plans to execute inflation-taming policies through monetary instruments. The anticipated collaboration with the Ministry of Finance is expected to play a crucial role in this strategy.
Refineries and Pump Prices: Governor Cardoso highlighted the anticipated resumption of operations in the country’s refineries, emphasizing its potential contribution to a reduction in the pump prices of Premium Motor Spirit (PMS). This reduction is seen as a key factor in managing inflation, especially given PMS’s significant role in the Consumer Price Index (CPI) basket.
Inflation Outlook and Economic Growth: Looking ahead, the Central Bank’s inflation-targeting policy aims to rein in inflation to 21.4%. Governor Cardoso expressed optimism that decreasing inflation in 2024 will positively impact businesses, create a more predictable cost environment, potentially lead to lower policy rates, stimulate investment, fuel growth, and create job opportunities.
