The Central Bank of Nigeria (CBN) has reiterated its commitment to stabilising the naira as data showed improved investor confidence and a narrowing exchange rate disparity.
CBN Governor Yemi Cardoso made this known during a Monetary Policy Forum (MPF) meeting held in Abuja on Thursday.
He stated that ongoing monetary policies are setting Nigeria on a path of sustainable economic stability, reinforcing the CBN’s strategic approach to forex market management.
“Again, let me say that yes, the naira has seen quite some volatility in the recent past, and we believe that it is getting to a position of stability.
“But it is very important to recognise that as far as the international community and international investors are concerned, the naira is at a point where it is a lot more reflective of its real rate, as a result of which it is more competitive,” he said.
The CBN governor attributed the increase in foreign investor interest to the recent policy measures aimed at enhancing forex liquidity.
He emphasised the need for collaboration among policymakers to maintain the momentum.
Cardoso further explained that the Monetary Policy Forum provides a structured platform for rigorous discussions on monetary policy formulation and implementation.
“This forum is a focused platform for rigorous intellectual discourse, providing an opportunity to examine monetary policy formulation, implementation, and outcomes. Unlike broader economic conferences, our discussions here are designed to address monetary policy challenges with precision, offering evidence-based insights to enhance policy effectiveness,” he said.
He noted that the country has witnessed relative stability in the forex market with external reserves exceeding $40 billion as of December 2024.
“So not only do we have a higher reserve number in relative terms, but also the health of our reserve level is certainly good, much stronger and has been more bolstered,” he added.
Monetary Policies and Inflation Control
CBN’s Deputy Governor of Economic Policy, Muhammad Abdullahi, underscored the role of the tightening monetary regime in containing inflationary pressures and restoring confidence in the financial system.
“Leveraging the traditional monetary policy tools, such as adjustments to the monetary policy rate (MPR) and cash reserve requirements (CRR), complemented with the use of open market operations, the bank implemented a cumulative increase of 875 basis points in the MPR, bringing it to 27.5 per cent by December 2024.
“In addition, the CRR for other depository corporations was raised to 50 per cent and that of merchant banks to 16 per cent, while maintaining the liquidity ratio at 30 per cent. These decisive measures were necessary to address inflationary pressures and stabilise prices, which are critical to maintaining the confidence of market participants,” Abdullahi explained.