CBN Governor, Cardoso Breaks Silence Over Depleting Foreign Reserves, Naira Stability

Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), recently clarified the bank’s stance regarding the use of the country’s foreign reserves and the performance of the Naira.

Speaking at the Spring Meetings of the International Monetary Fund (IMF) and the World Bank, Cardoso emphasized that the Naira’s recent behavior in the market is a result of independent trading dynamics and not due to direct intervention by the CBN.

The Governor dismissed widespread speculations that the CBN had been actively defending the Naira by injecting foreign exchange into the market, which led to a noticeable drop in foreign reserves. According to Cardoso, the observed depletion was primarily for fulfilling various national obligations, which is a fundamental purpose of maintaining foreign reserves.

In terms of policy direction, the CBN Governor highlighted a shift towards orthodox central banking practices to reinforce confidence in the Nigerian currency. Notably, Cardoso mentioned a significant increase in the monetary policy rate by 600 basis points over a brief period as part of these measures. He stated that this was necessary to address various economic challenges, including those not directly controllable by the CBN, such as food inflation.

Cardoso also stressed the importance of cooperation between monetary and fiscal authorities to effectively manage the economy. He reassured that issues related to the government’s financing through the central bank, known as Ways and Means, were being addressed and were no longer a primary concern.

Looking forward, Cardoso committed to enhancing communication with the public to set realistic expectations about the central bank’s policies and their impact. He expressed satisfaction with the tough decisions made during his tenure, noting that these efforts had transformed the Naira from one of the weakest to the strongest performing currencies globally within six months.