Olayemi Cardoso, Nigeria’s Central Bank governor, says he’s “relatively pleased” about the rare calmness the naira has witnessed in the past months.
In an interview with Bloomberg TV on Tuesday, the country’s monetary authority head expresses optimism that the excessive volatility of the naira may not resurface again.
“I do believe that we have more or less seen the worst in terms of volatility,” Cardoso said.
“We are also very alive to observing the way and manner in which that market operates and ensuring that it gives the best value that can be accomplished using certain tools,” the CBN chief added.
Cardoso believes that the various interventions introduced by the CBN had helped quell the volatility of the naira while noting that the country’s monetary policy committee (MPC) “will do everything possible to curb inflation”.
The naira has maintained relative stability this month trading in a narrow range between 1,473 and 1485 per US dollar at the official market.
That has sent its 10-day rolling volatility to the lowest in a year and its 100-day swings to the least since November, BusinessDay earlier reported.
The seeming moderation in the naira is a big win to the reforms of President Bola Tinubu’s administration and a positive point in direction to the interventions of the country’s central bank.
The CBN at its May’s Monetary Policy Committee meeting jacked up its key interest rate to a record 26.25 percent in a bid to attract dollar inflows, end volatility and curb inflation, which jumped further in May to a 28-year high of 33.95 percent.
The monetary authority is combining a total 750 basis points of hikes this year with heavy mop-up of naira liquidity through regular bond sales as well as dollar inflows from external lenders to stabilize the market.
Many analysts believe the rare calmness of the naira is due to the fresh FX inflows into the economy.
About $5.95 billion from the World Bank and Afreximbank entered into the Nigerian economy, helping to strengthen Nigeria’s external reserves and sustain the value of the naira.
This fresh dollar liquidity saw Nigeria’s foreign currency reserves rise further to $33.58 billion as of June 19, 2024, according to data from the Central Bank of Nigeria (CBN).