Yemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), has affirmed that the Nigerian naira is currently undervalued, expressing a commitment to expedite the discovery of its genuine price in the near term.
Speaking at the 2024 Macroeconomic Outlook of the Nigerian Economic Summit Group (NESG) on Wednesday, Cardoso emphasized the importance of coordinated measures on the fiscal side to achieve a more balanced and stable exchange rate.
“We believe that the naira is currently undervalued, and coupled with the coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate,” stated the CBN Governor.
Cardoso also discussed the CBN’s inflation-targeting regime, revealing a target inflation rate of 21.4 percent. He highlighted the expected moderation in pump prices of Premium Motor Spirit (PMS) due to the operational status of the country’s government and private-owned refineries in 2024 as a crucial factor in the economic equation.
“The economic stabilization or reduction in fuel cost is poised to have far-reaching implications across various sectors, contributing significantly to overall economic efficiency and resilience. Inflationary pressures are expected to decline in 2024 due to the CBN’s inflation-targeting policy, which aims to rein in inflation to 21.4 percent,” explained Cardoso.
He further emphasized that the adoption of the inflation-targeting framework involves clear communication, the use of monetary policy instruments, and collaboration with fiscal authorities to achieve price stability and positively influence consumer behavior.
Cardoso anticipates that the decline in inflation will have a substantial impact on businesses, providing a more predictable cost environment and potentially leading to lower policy rates. This, in turn, is expected to stimulate investment, foster growth, and create job opportunities.