Understanding CBN’s Role in FX Rate Dynamics
Central Bank of Nigeria (CBN) Governor Yemi Cardoso clarified that the CBN does not determine the foreign exchange (FX) rate directly, but rather works with the FX inflows that the country receives.
He emphasized that the central bank does not “produce” foreign exchange, and instead its role is to manage the inflows effectively and leverage them to attract more through foreign direct and portfolio investments.
Cardoso also discussed the ongoing reforms aimed at addressing distortions in the FX market, noting that part of the bank’s approach is to promote a market-driven exchange rate while ensuring greater price discovery.
He highlighted that the collaboration between monetary and fiscal policies will be crucial in stabilizing the economy and tackling inflation, which he expects to ease in 2024.