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Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), announced yesterday that the apex bank will back initiatives to enhance the nation’s external reserves, including the proposed Eurobond issuance by the Federal Government.
In an interview with Bloomberg TV, Cardoso emphasized the need for diversified sources of foreign reserves. “We should have a diversity of sources. It shouldn’t just be the Eurobond market, it shouldn’t just be foreign portfolio investors; it should be a mix of different avenues,” he stated.
Cardoso also expressed optimism about the stabilization of the naira, noting that the CBN is “relatively pleased” with the progress made so far. “I believe we have more or less seen the worst in terms of volatility,” he said. “We are keenly observing the market and ensuring it operates in a way that provides the best value using available tools.”
Reviving confidence in the naira is essential for attracting investors, Cardoso highlighted. Since his appointment in September, the CBN has raised interest rates by 750 basis points to 26.25%, cleared a foreign-exchange backlog, and revamped the country’s exchange rate policies, effectively devaluing the naira. These actions have contributed to stabilizing the naira, despite it being the world’s worst-performing currency this year after the Lebanese pound.
Olumide Sole, an analyst at Lagos-based Vetiva Capital Management Ltd., commented, “Our thoughts align with those of the governor. Based on the purchasing power parity model, the naira is currently valued at around 900 naira per dollar, which is far less than the current market price.”
The naira has traded within a narrow range of N1,473 to N1,490 per dollar this month and fell 0.3% to N1,492.71 per dollar on Tuesday.
“We’re relatively pleased with where we are,” Cardoso reiterated, while acknowledging the need for ongoing efforts. “It’s a continuous work in progress. We will do everything possible to ensure we manage the macroeconomic fundamentals that affect the currency.”
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