Our hard-to-embrace reforms will eventually make naira stable – CBN

The Central Bank of Nigeria (CBN) has assured Nigerians that the seemingly tough reforms created would strengthen the naira and stablise the economy.

Dr Olayemi Cardoso, governor of the apex bank, said this in an interview with Arise TV on Monday.

He said the bank had initiated key programmes to strengthen the local currency.

The CBN chief said there has been inadequacy of liquidity in the foreign exchange as a result of certain distortions, but recent policies were instituted to address the situation.

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He said, “I think it’s very important to say that we have been in a situation in the recent past where there has been a shortage of liquidity in the foreign exchange market arising from certain distortions, and that itself has created a situation where there is volatility in the market.

“We have looked at this over the course of weeks and come up with certain policies that have focused on creating an environment whereby liquidity comes back to the market and where we can see a more vibrant market than we had before.”

Speaking about the involvement of commercial banks in foreign exchange, Cardoso said, “Ultimately I see situations where people who require foreign exchange have to go to anybody in the bank. You can go to the central bank or commercial banks.

“A system that is open and transparent creates an environment for distortions to go away, and thereby so those who want to bring in foreign exchange and those who want to demand it can do so on an open basis of willing buyer, willing seller and therefore the market becomes market active and the price is eventually discovered to the level that makes sense.”

He also allayed fears on reports that the federal government wanted to convert the domiciliary accounts of Nigerians to naira, saying there was no iota of truth in it.

“From what I can see, there has been a recent publication article that went round and said that the federal government has intentions of using the domiciliary account balances and converting them to naira.

“As the governor of the Central Bank, I can tell you that there is nothing that could be farther from the truth. And let me just illustrate this by saying the reforms that you have seen in the past months which have obviously culminated into the naira exchange becoming a little bit less volatile and ultimately will be stable.

“As hard to embrace, market reforms that we have spoken about earlier with the situation where there is free entry and free exit, and attaching domiciliary account goes against the green of that philosophy.

“We are talking about liberalising the market and encouraging foreign portfolio investors, and foreign direct investors to come in and invest. Doing something like attaching domiciliary account balances goes against the green of that philosophy.

“And we’ll certainly not do a thing like that. I want to assure you that there is absolutely no truth and at no point in time has there ever come up for discussion because we are very clear that that does not fall into the overall strategy and focus that we have with the central bank.”