The Central Bank of Nigeria (CBN) has assured that the Naira’s true value will be restored with the introduction of an electronic FX matching system, which has proven effective in other markets.
The Governor of CBN, Olayemi Cardoso, gave the assurance on Friday night during the 59th annual bankers dinner organised by the Chattered Institute of Bankers of Nigeria in Lagos.
Cardoso said that CBN had undertaken critical reforms to unify Nigeria’s exchange rate, eliminating distortions and restoring transparency.
“To further enhance the functionality of the foreign exchange market, we are introducing an electronic FX matching system, which has proven effective in other markets,” he said.
He said that panic buying was one of the reasons for FX volatility.
According to him, it is vital to address the disinformation circulating about a supposed demand-supply gap in the FX market, fueling unnecessary panic.
Cardoso said the current USD exchange rate reflected the price that the most desperate buyers were willing to pay, adding that this does not represent the true market value of the Naira.
“The introduction of the electronic matching system will correct these distortions by enhancing the price discovery process.
“Additionally, it will significantly boost the Central Bank’s oversight and intervention capabilities, ensuring a more stable and transparent foreign exchange market,” he said.
He also explained efforts of the apex bank to boost diaspora remittances to further make the Naira stronger.
“An enabling policy environment has led to a doubling of monthly remittances from an average of 300 million dollars in 2023 to nearly 600 million dollars in August 2024.
“We are committed to further integrating the Nigerian diaspora into our financial system, exemplified by the introduction of the non-resident BVN registration.
“We expect our financial institutions to develop products that not only enable the diaspora to support their families but also provide opportunities for savings and investment in Nigeria,” he said.
Earlier, he explained inherited challenges of FX subsidy regime in 2022 estimated to far exceed that of fuel subsidies, responsible for N4.5 trillion revenue loss.
“In 2022 alone, the potential revenue lost due to a less flexible FX regime was approximately N6.2 trillion, compared to N4.5 trillion from fuel subsidies.
“These funds could have significantly contributed to critical investments in education, healthcare and infrastructure development,” he said.
He further said that some of the various reforms adopted by CBN were already yielding results.
