Cardoso Breaks Silence Over Depleting Foreign Reserves

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN) has said the bank is not strengthening the Naira with the country’s foreign reserves.

Speaking at the ongoing Spring Meetings of the International Monetary Fund (IMF) and the World Bank, Cardoso said the Naira is performing independently, and not as is being speculated by the public.

He added that his team is determined to nurse a foreign exchange market ruled by the principle of willing buyers-willing sellers.

Cardoso’s clarification came following speculations that the bank pumped forex into the market vis-a-vis depleting foreign reserves corresponding with massive appreciation of the Naira in the foreign exchange market (forex).

His words, “Defending the Naira, from every indication is an elephant in some rooms. I will make this as clear as possible. It is not our intention to defend the Naira. Much as I have read in the recent few days some opinions about what has happened in terms of our reserves being drawn down, and the CBN Defending the Naira, if you take your mind to our philosophy and policy, you will see it will be counterintuitive. We want the Naira to perform independently as long as we have a vibrant forex market.

“Initially we needed to keep the BDCs going. So it is important for people to get forex for school fees, travel and the like.

According to him, the depletion of the foreign reserves was due to the settling of some of the country’s obligations.

“The shift you see in our reserve is not to defend the Naira but for things like settling obligations that fell due. Mind you, that is the reason for keeping foreign reserves, in the first place.”

Cardoso also said that his team is cooperating with the fiscal authorities and that, Ways and Means is no longer an issue.

He said, “Let me be upfront in saying that the monetary policy is only one side. It is very clear to us that we need to have a very good handshake with the fiscal authorities.

“For instance, food inflation is not within the purview of the CBN. Ways and Means is now less an issue.”

The CBN boss said he decided to go the orthodox central banking route to build confidence in the Nigerian currency.

He also said that he had no choice but to raise the monetary policy rate, recording a 600 basis points hike within a short period.

He promised to communicate more with Nigerians and other stakeholders to moderate their expectations.

“We want Nigerians to be realistic in their expectations. We have used the MPC to explain why we took the measures that we have taken.

“We will strengthen the communication framework using different platforms to communicate.”

The governor expressed satisfaction that he took hard decisions but added that they are yielding desired outcomes.

He said within two months of his administration, the Naira was adjudged the worst-performing currency, but within six months it moved to the best-performing currency, globally.

“Ultimately the objective is to ensure that we moderate inflation’’, he stated.