- Permits IMTOs to sell FX directly on official window
Governor of the Central Bank of Nigeria, Olayemi Cardoso, has said the worst of the naira volatility is over.
Cardoso, who made the disclosure in an interview with Bloomberg TV on Tuesday in London, also said: “We are also very alive to observing the way and manner in which that market operates and ensuring that it gives the best value that can be accomplished using certain tools.”
The apex bank chief noted that the bank is “relatively pleased” with the progress it has made in stabilising the naira and believes the excessive volatility may be a thing of the past.
June has been a month of relative stability, marked by the naira’s smallest 100-day swings since January. That’s despite the inflation rate inching to a 28-year high in May —though an easing in the pace of acceleration suggests it may be nearing a peak.
Since his appointment in September, Cardoso has overseen the liberalisation of Nigeria’s exchange rate and steep interest-rate hikes. The naira has slid about 70% against the dollar since June 1 last year, just after President Bola Tinubu took office. That brought it closer to the street price and hit consumers hard.
Cardoso said: “In the past 2–3 weeks, after a period of volatility, we have seen a lot of stability in the markets. The rates have been matched and right now we have more or less one rate. This is good, it allows companies to plan and it gives an idea of where the potential road of travel is for people who are investing in our economy.”
In terms of liquidity, he said the apex bank has seen an increase in the first quarter of this year which has resulted in a total inflow of about $24 billion, about 40 to 50% more than the quarters up to about 2021. “Clearly, it is having a positive impact. We believe that continuing on this trajectory will see this liquidity continue to flow,” he said.
Monetary, fiscal coordination
Speaking on whether the MPC will continue with its rate hike, he said the Monetary Policy Committee is determined to ensure that they put inflation under control. “MPC will do whatever it needs to ensure that inflation is kept in check.”
He said: “It is important to mention that the monetary and fiscal (Authority) work very closely, and I believe that complementarity is what will give us the optimal rate for the naira over a period of time.
“As you know, the policies do take time to manifest”, the governor argued, adding that, “It is very important to ensure that the reform agenda is one that is properly sequenced to bring out the right outcomes. What I know in conjunction with the meeting we had with the fiscal side and the continuous collaboration that takes place between us and them, I believe that Nigeria is on a relatively good track.”
Reacting to comments on the need to re-evaluate government reforms, Cardoso said; “Let me be clear on something, nobody has the monopoly of wisdom. With reforms, you should be confident enough when you see that certain things are not going in the direction that you are expecting. To say no, let’s tweak it and see perhaps if we can add something or take something away to infuse a greater outcome. If we consistently do that, it will be a win-win situation for us.
New CBN circular permits IMTOs to sell FX directly on Nigeria’s official window
Meanwhile, the CBN has permitted eligible International Money Transfer Operators (IMTOs) to sell foreign exchange (FX) at Nigeria’s official window.
This directive, effective immediately, is part of CBN’s plan to ensure greater remittance flows through formal channels and improve the efficiency of the foreign exchange market.
The circular read: “As part of CBN’s commitment to the smooth functioning of the foreign exchange markets and enabling greater remittance flows through formal channels, the Bank has implemented measures that will enable eligible International Money Transfer Operators (IMTOS) to access Naira (NGN) liquidity through the CBN. These measures are aimed at widening access to local currency liquidity for the timely settlement of diaspora remittances.
“Henceforth, eligible IMTO operators will be able to access the CBN window directly or through their Authorised Dealer Banks (ADBS) to execute transactions for the sale of foreign exchange in the market.”
This move by the CBN comes at a time when the official market is struggling with FX liquidity. For about a month, the value of FX turnover on the NAFEM window has been between the range of $83 million and $390 million.
A similar move was made last month as the CBN allowed International Oil Companies (IOCs) to sell 50% balance of their repatriated export proceeds to authorised forex dealers.
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