The Central Bank of Nigeria will continue to implement policies that would foster sustainable growth in the financial markets and ensure overall economic stability, its governor, Olayemi Cardoso, has said.
Cardoso gave the commitment during his presentation of the 2024 first half-year review of the Bank’s activities to the Senate Committee on Banking, Insurance, and Other Financial Institutions in Abuja on Friday.
This was happening just as the apex bank said total value of foreign exchange transactions with authorised dealer banks and licensed bureau de Change (BDCs) as at July 19,2024 stood at about $116m.
Giving details on the transactions, Cardoso said about $106.5m was sold last Thursday and Friday to 29 authorised dealer banks between an exchange rate range of $1,498/$1 to $1,530/$1, in addition to about $9.5m bought from four authorised dealer banks at rates between $1,510/$1 and $1,550/$1.
The CBN governor said the transactions were part of its regular sale of FX through authorised dealer banks and licensed BDCs to improve the supply in the FX market in line with its price stability mandate and commitment to ensure a well-functioning and liquid market.
He blamed recent movements in the FX market on demand pressures from corporate entities and the expected uptick during the summer period for school fees and other basic travel allowance needs.
Over the next few weeks, Cardoso said the CBN would continue to support various segments of the official FX market with liquidity to strengthen the growth of the economy.
The bank said it would continue to closely monitor compliance with existing trading rules and regulations by authorised dealer banks to promote ethical conduct and support the drive to achieve stability in the FX market.
“The General public are advised to direct their FX demands to their banks and BDC operators in accordance with prevailing market regulations,” the Bank said.
Meanwhile, in his comprehensive briefing to the lawmakers, Cardoso outlined the CBN’s mandate and provided an in-depth analysis of Nigeria’s economic performance, recent policy measures, and the outlook for the remainder of the year 2024.
Since his assumption of office in October 2023, he said the Bank’s management concentrated on stabilising the economy, restoring confidence in financial markets, and establishing a solid foundation for sustainable growth.
Highlights of some key focus areas by the Bank included efforts to curb inflation, stabilise the exchange rate, enhance financial sector supervision, promote financial inclusion, and increase transparency in monetary policy decisions.
On the macroeconomic performance of the CBN since October 2023, Cardoso underlined the resilience of the Nigerian economy in the first half of 2024, reporting a growth rate of 2.98% in the first quarter, up from 2.31% during the corresponding period last year.
He noted that the Services sector emerged the main economic driver, contributing about 58.04% to the gross domestic product (GDP) with a growth rate of 4.32%,with the Industrial sector also showing improvement, achieving a growth rate of 2.19%.
Addressing the persistent inflationary pressures, with headline inflation rising from 29.90% in January to 34.19% in June 2024, the CBN governor said the pace of monthly increases moderated, suggesting effectiveness of the Bank’s anti-inflationary measures.
The significant narrowing of the spread between official and BDC rates, he pointed out, was indicative of the successful price discovery and reduction of arbitrage opportunities. In addition, he said the observed increase in external reserves was largely attributed to receipts from crude oil-related taxes and third-party payments.
On the banking sector’s achievements, Cardoso reported improvements in key indicators such as capital adequacy, liquidity, and non-performing loan ratios, with the capital adequacy ratio remaining strong at 12.2%, while industry liquidity ratio increased to 46.2%, and the non-performing loan ratio fell to 3.8%.
These indicators, he said, were reflective of enhanced liquid assets and better risk asset quality.
He further outlined key policy measures the Bank implemented to tackle domestic macroeconomic challenges, including raising the policy rate to 26.25%, increasing Cash Reserve Ratios, normalising Open Market Operations, and adopting Inflation Targeting as a new monetary policy framework.
He said the reforms in the foreign exchange market resulted in a convergence of official and Bureau de Change rates, promoting transparency and reducing market distortions.
He said the ongoing recapitalisation efforts in the banking sector were focused on enhancing financial stability and driving progress toward realising the aspiration of the present administration to build a $1trillion economy by 2030.
He expressed optimism about Nigeria’s economic prospects despite acknowledging ongoing challenges, adding that the importance of continued cooperation from all stakeholders in overcoming these challenges and achieving robust and inclusive growth cannot be over-emphasized.
Earlier, the Chairman of the Senate Committee on Banking and Other Financial Institutions, Senator Adetokunbo Abiru, lauded the CBN Governor and his team for their efforts to stabilise the economy since taking office.
He highlighted the new management’s achievements to include a reduction in month-on-month inflation from 2.64% in January 2024 to 2.14% in May 2024, increasing exchange rate stability, and a $35 billion boost to the nation’s external reserves.
These improvements, Abiru noted, led to favourable ratings from global rating agencies and enhanced foreign portfolio inflows.
