Central Bank Governor, Yemi Cardoso, has said that it is not its intention to defend the naira.
Rather, he wants a functional and vibrant currency market where the naira can compete among its peers.
He stated this during the an interview with the International Monetary Fund African Department Director, Abebe Selassie, at the recent IMF/World Bank Spring Meetings in Washington DC, United States of America,
He said, “I know that the issue of defending the naira has become an elephant in some room. I want to try to make this as clear as possible. It is not our intention to defend the naira. It is not. Much as I have read in the recent few days, some opinions with respect to what is happening with our reserves. If you think back to what our overall policy and philosophy has been here, you can see that it is counter-intuitive. Basically, what we are encouraging is for the market to be a willing buyer, willing seller, and price-discover-led one. Ultimately, I perceive a future where the CBN may really not need to intervene except in very unusual circumstances.
“As long as we have a vibrant currency market, why do we need to intervene? I can understand that, especially at the outset, we have experienced that we needed to get the Bureau de Change segment going. We had to release tiny amounts of money to catalyse those happenings. Individuals must have funds to send their kids abroad and do things that are important. It is important not to keep them out of the mainstay.
“What we have seen with the shifts in our reserves are the shifts that you would find in any country’s reserve situation. When debts are due and payments need to be made, they are to be made, because that is also part of keeping your credibility intact.
“In two days, we had about $600m that came into the reserves account. I wouldn’t want people to be too excited. We want a market that operates on its own – willing buyer, willing seller, price discovery. That is where we are going. The shifts that we are seeing in our discovery have little or nothing to do with defending the naira, and that is certainly not our objective.”
