Nigerian Currency Depreciation: Central Bank Of Nigeria (CBN) Head Reaffirms Commitment to Reviving Confidence in the Economy

• Olayemi Cardoso, the Central Bank of Nigeria (CBN) governor reaffirms commitment to reviving confidence in the economy amidst Nigerian currency depreciation.

The Nigerian central bank remains committed to building confidence in the economy but that hinges on the implementation of “bold reforms” and residents’ help in easing pressure on the naira. 

However, critics have faulted the central bank’s policies including the devaluation of the local currency in 2023 for worsening the plight of millions.

Ordinary Nigerians Urged to Help Ease Pressure on the Local Currency

The Nigerian central bank governor Olayemi Cardoso has told the country’s legislators that his organization is committed to building confidence in an economy being rocked by rising prices and a rapidly depreciating currency. 

The governor, however, said ordinary Nigerians should play their part in helping to ease pressure on the local currency.

Cardoso’s remarks before the Nigerian House of Representatives on Feb. 6 were made more than a week after the naira’s exchange rate versus the U.S. dollar hit a new all-time low. 

See Also: Nigeria’s CBN Announces New Changes for International Money Transfer Operators

As previously reported, the Central Bank of Nigeria (CBN) governor believes the naira’s current exchange rate of around NGN1,450 per USD1 significantly undervalues the currency.

Since then, the CBN has attempted to engineer the naira’s recovery through a series of measures which include issuing revised guidelines for international money transfer services and changes to the reporting requirements on foreign currency exposures of banks.

“We are committed to implementing policies that will ensure a stable macroeconomic environment and guarantee improved livelihoods for all Nigerians,” Cardoso said.

Despite the CBN governor’s recent reassurances, there’s a growing sentiment among Nigerians that the central bank is not doing enough to convince people to abandon the parallel forex market. 

Others argue that the central bank may lack sufficient foreign exchange reserves to support or stabilize the naira’s exchange rate.

This perceived shortage of foreign exchange has sparked fears the CBN might eventually seize foreign currency held in domiciliary accounts. However, the central bank recently refuted claims that it plans to convert $30 billion held in these accounts into the local currency.

No plans to convert $30bn domiciliary deposits to naira. This news is fake! pic.twitter.com/oGDR1s2gPQ

— Central Bank of Nigeria (@cenbank) February 3, 2024

Meanwhile, Cardoso also informed legislators that Nigeria may have reached a “turning point” which demands the implementation of what he called bold reforms. Still, not everyone is convinced by the CBN chief’s latest reassurances. For instance, one social media user, Chris Oyime, posited that the CBN’s reforms will only be successful if it prioritizes retail money exchangers, also known as bureaux de change (BDC). He said:

See Also: Nigeria’s Naira Plunges To A New Low As The CBN Governor Reacts

“Please cease providing FOREX to commercial banks and allocate 100% of the FOREX to BDC. Commercial banks will not make it available but will continue to hoard it or sell it to black marketers. Alternatively, abolish BDC. You must choose one of these two options,” wrote the user.”

Please stop giving FOREX to commercial banks and 100% of the FOREX to BDC since commercial banks will not make it available but will keep hoarding it or selling it to black marketers. Or you scrap BDC. You have to do one of these two.

— Anuoluwapo Boboye (@COyime) February 7, 2024

Another user, Omojola Joshua, criticized the Cardoso-led CBN’s decision to allow the naira to float. 

According to Joshua, this move has not only failed to prevent the depreciation of the naira, but it has also caused suffering for tens of millions of Nigerians.

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