The Governor of the Central Bank, Yemi Cardoso says the measures taken so far by the apex bank to stabilize foreign exchange rates have started yielding positive results.
He stated that these actions would assist to stabilise foreign exchange rates and reduce the distortion that high exchange rates have on inflation, as the two are inextricably linked.
Cardoso, speaking at a Joint Senate Committee on Finance, Banking, Insurance, and Financial Institutions briefing on Friday, stated that the CBN’s operations have brought $1 billion into the Nigerian market in the past few days.
“We have already begun to see shifts in the positive direction. Indeed they (CBN measures) have already started yielding early results with significant interest from foreign portfolio investors which was a concern. That has already begun to supply the much-needed foreign exchange to the economy.
“For example, upward of the past few days, we have had over $1 billion that has come into the market, and this quite frankly has answered the question of if our policies are working,” Cardoso said.
The CBN Chief said with the numbers available, he can say that the market has been responding to the policies they have put in place.
He added that measures aimed at improving US dollar supply into the Nigerian economy have significant potential in taming the volatility of the exchange rate and in turn moderating inflation.
He, however, said that for these measures to be sustainable, Nigeria must as a country moderate our demands for foreign exchange.
While the CBN according to him is working hard to restore credibility to the central bank, he maintained that the genuine issue impacting the exchange rate is the demand for US dollars for business and personal needs.
The CBN Governor also assured that inflation is expected to decline this year using the inflation targeting framework and moderating to 21.1 percent.
The committee had on January 31 summoned the Central Bank Governor to appear before it.
The move comes amid pressing concerns about the state of the economy and the sharp decline of the naira in the foreign exchange market.
The Senators are asking the CBN to give explanations on the myriad of economic challenges the country is currently facing.