Sat. Jun 22nd, 2024

Naira/USD Nosedives to New Lows, But Central Bank Governor Says it is ‘Undervalued’

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Naira has reached an all-time low of #1500 per dollar, but central governor, Olayemi Cardoso, says it is “undervalued”.

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The Naira experienced a significant decline against the US dollar on the official market on January 29. Currently trading at 1500 per dollar on the black market, the naira has seen a year to date decline about 20%. 

Commenting on the development, the central Central Bank Governor Olayemi Cardoso said that the naira is undervalued and efforts are being made to address this issue.

The depreciation trend followed from a trend that started from the sacking of the former Central Bank Governor Godwin Emefiele. Previously, the central bank had maintained the naira’s exchange rate at just under NGN500:USD1.

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Since the new CBN leadership took office, the naira has steadily depreciated against major currencies in both official and unofficial markets, attributed primarily to foreign exchange shortages.

Despite this, Governor Cardoso stated during the launch of an economic outlook report that the naira is undervalued and efforts are underway to facilitate genuine price discovery, aiming for a more balanced and stable exchange rate through coordinated fiscal measures.

As per a report in the Leadership, the Central Bank of Nigeria (CBN) is strategizing to implement measures aimed at ensuring that all foreign exchange inflows are directed back to the central bank. 

Cardoso expressed optimism that the reforms initiated by the CBN will lead to a sustained and steady exchange rate. A stable exchange rate is anticipated to enhance investor trust and position Nigeria as an attractive destination for foreign direct investment.

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