As the country’s currency, the Naira crashes to an all time low of N1,355.00 to the US Dollar yesterday in the parallel market, Central Bank of Nigeria Governor, Olayemi Cardoso has declared that the currency is undervalued.
This is the first in recent times that the CBN has come out with this position as subsequent administrations had maintained that the local currency was overvalued.
Both the World Bank Bank and the International Monetary Fund, IMF had insisted over time that the Naira is overvalued.
Cardoso disclosed this at the Nigeria Economic Summit’s Launch of Outlook for the Nigerian Economy 2024.
He was optimistic that inflation will moderate this year following policy measures put in place by the Central Bank.
He said: “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%.”
He noted that the outlook for decreasing inflation in 2014 will have a profound impact on businesses, providing a more predictable cost environment and potentially leading to lower policy rates, stimulating investment, fuelling growth and creating job opportunities.
Cardoso had in November last year promised sweeping reforms to the country’s monetary policy aimed at taming inflation and stabilizing the exchange rate.
However, inflation has since then accelerated and stood close to a three-decade high of 28.9 per cent as at December 2023.
Nigeria is battling a cost-of-living crisis instigated by reform measures, led by relaxation of the country’s managed exchange rate and the abolition of fuel subsidies.
The moves were praised by international investors but have caused hardship at home and led to steep falls in the currency.
Cardoso said the country will expedite genuine price discovery in the near term.
