The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has expressed confidence that the naira’s appreciation will continue due to sustained liquidity in the foreign exchange market. Speaking at the International Monetary Fund/World Bank Spring Meetings in Washington, D.C., Cardoso highlighted that Nigeria’s FX market currently has between $600 million and $1 billion in liquidity.
Cardoso emphasized the importance of promoting a willing-buyer and willing-seller price discovery system in the country’s FX market. He envisions a future where the Central Bank will only intervene in exceptional circumstances, as long as there is sufficient liquidity in the market. The recent influx of $600 million into the foreign exchange reserves is a positive sign for the economy.
The Governor also mentioned that funds have been allocated to Bureau de Change to ensure individuals have access to foreign currency for essential needs like school fees and healthcare. This injection of funds aims to stimulate the currency market and reduce the need for central bank intervention.
The positive outlook for the naira was reflected in its significant N75 gain against the dollar in Wednesday’s trading. With a vibrant currency market and adequate liquidity, Nigeria is poised for continued stability and growth in its foreign exchange market.
By prioritizing market-driven price discovery and ensuring sufficient liquidity, the Central Bank is paving the way for a more sustainable and self-regulating FX market. As Nigeria continues to attract foreign investment and strengthen its reserves, the naira’s appreciation is set to continue, benefiting both the economy and its citizens.
