By 
Mr. Yemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), declared that the Naira is significantly undervalued, expressing concerns about the inefficiencies and distortions in the foreign exchange market. During the presentation of a communiqué from the 293rd meeting of the apex bank’s Monetary Policy Committee (MPC) in Abuja, Cardoso emphasized the need to investigate manipulations affecting the market.
Cardoso highlighted ongoing efforts to address distortions caused by unscrupulous behavior, affirming that those involved in malpractices would face legal consequences. The CBN governor informed that the apex bank is actively clearing the backlog of genuine forex claims, contributing to the country’s foreign reserves, which now stand at $34 billion.
In response to challenges in the foreign exchange market, Cardoso mentioned the injection of liquidity into the system, attracting up to $2 billion. He underscored the collaboration with law enforcement agencies to enhance market understanding and emphasized a shift toward an aggressive regulatory environment with zero tolerance for sharp practices.
The governor stressed the importance of players in the market adhering to all CBN regulations, with consequences for those who refuse compliance. A comprehensive exercise is underway to identify past market activities and determine necessary actions.
Cardoso disclosed the CBN’s move away from intervention programs and development finance initiatives like the Anchor Borrowers Programme, citing them as time-consuming and counterproductive. He expressed concerns about the estimated excess of N10 trillion in recent interventions, asserting that they inflicted damage on the economy.
While acknowledging the need for price stability, Cardoso announced concrete steps to recover loans granted through past interventions. The MPC meeting, the first under Cardoso as CBN governor, witnessed an aggressive tightening of rates, including a 400 basis points increase in the Monetary Policy Rate (MPR) and adjustments to the Cash Reserve Ratio (CRR) and Asymmetric Corridor.
Despite these measures, the Liquidity Ratio was retained at 30 per cent. The governor’s decisive actions reflect the commitment to address the challenges in the foreign exchange market and implement effective regulatory measures.
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