According to the Central Bank of Nigeria (CBN), the current exchange rate for the naira does not reflect the true value of the local currency.
CBN Governor, Olayemi Cardoso, made the statement yesterday at the 59th Bankers Night organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.
The naira exchanges at N1,720 to dollar at the parallel market, and below N1,663 to dollar at the official window.
He said the current US dollar exchange rate reflects the price that the most desperate buyers are willing to pay, and this, in the apex bank’s view, does not represent the true market value of the naira.
The CBN boss said the apex bank expects that the introduction of the electronic marketing system will correct these distortions by enhancing price discovery process for the naira.
He said the exchange rate has since June been relatively stable. He also refuted disinformation circulating about a supposed demand supply gap in the FX market, which he said was truly unnecessary.
Cardoso also stated that an FX market defined solely by when and how the Central Bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigeria’s.
“Now is the time for banks to step up to their intermediation and market making responsibilities providing customers with the right solutions to run their businesses and manage risk effectively, ” he said.
