CBN Doesnt Produce Forex, But Manage Inflows – Cardoso
…Says foreign portfolio investors eager to return to Nigeria due to apt policies.
The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso has cautioned that the apex bank should not be held responsible for the the forex challenges of the nation as its role doesn’t cover generating forex but managing forex inflows, as it relies on infows to function.
He said: “This is a problem I sometimes have, when many blame the central bank for the foreign exchange situation. It’s really a problem I have because we rely on what comes in. We don’t produce foreign exchange. All we can try and do is use that to leverage for more to start coming in. And that also includes foreign direct investment, foreign portfolio investors.”
The governor made the assertion while speaking in an exclusive interview with Arise TV earlier in the week
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Cardoso noted also that foreign portfolio investors are eager to return to the nation because appropriate steps are taken economically and the results will benefit the nation.
He stated that: “Today, I will say that we have a situation where a lot of foreign portfolio investors are very interested in coming back to the Nigerian markets. It’s incredible. And if there’s any group that has taken an interest, very methodically, in understanding the reforms that are taking place, and seeing how it is taking the country to a direction they believe is the right one, it is the foreign portfolio investors. They come. You think they may not come back, they come back a second time. They come back a third time. Then they see some of the rating agencies coming out with their own conclusions of how they see the economy of the country progressing, it validates what they’re thinking. We do additional reforms, it continues to encourage them. That’s how I see investors play today.”
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The CBN Governor called on Nigerians to avoid panic as the worst days were gone, adding that the nation economically is now taking the right and necessary steps which are validated by many international economic organisations and investors confidence are gradually been restored.
“The time for panic and cynicism isn’t now. It’s past. We are on the road now where right policy decisions are being taken. This has been validated by the international community, and rating agencies. Our ratings have strengthened. The experts are not sentimental when they look at what is going on.They analyse and draw conclusions. Those who follow that thinking will see that Nigeria is definitely on the mend.”
Addressing issues on the capital market, he explained: “We are in a situation where we have in the recent past been in shortage of liquidity in the market to the foreign exchange market arising from certain distortions and that in itself has created a situation where there has been huge volatility in the market. We have looked at this over the course of the past months and came up with certain policies which focused on creating an environment where liquidity comes back to the market and where we can see a more vibrant market than we had before.”
“Ultimately, I see a situation where people who require forex exchange don’t have to know anybody in the banks, in either the central bank or the commercial bank.
“A system that is open and is transparent creates an environment for distortions to go away and thereby for those who want to bring in foreign exchange, and those who want to demand it can do so.”
Speaking further, he said the latest signals are very positive on foreign investments.
He noted that some of the recent moves to have NNPC and some MDAs move their funding straight to the central bank also sends great signals to and boost confidence of investors.
He described them as “very positive reforms” that may be seen as little but with significant impact on the investors, though not the end game yet but definitely in the right direction.
Cardoso said as such reforms boost confidence and investment inflows resume, the wild forex market volatility currently being experienced will begin to reduce.
