Foreign Exchange Volatility Now Below 0.5% , FX Stabilises –Cardoso

The Central Bank of Nigeria (CBN), has reported decline in foreign exchange volatility, below 0.5%, a key indicator of improving health of the economy.

This was announced today in Abuja by the Governor of the Central Bank of Nigeria (CBN) Mr Olayemi Cardoso.

Speaking during a press briefing in Abuja on Tuesday after the 300th Monetary Policy Committee (MPC) meeting, Cardoso emphasised that the reduction in exchange rate volatility flows from restored investor confidence, improved foreign exchange reserves, and greater transparency in CBN operations.

“If you look at the exchange rate, volatility has reduced from over 4% a year ago to less than half of 1% now. That’s an indication of stability,” Cardoso said.

Mentioning a combination of factors, including policy consistency, orthodox monetary tightening, and transparency initiatives over the past 18 months as factors, Cardoso noted that the central bank’s early decisions to liberalise the FX market, unify exchange rates, and boost supply through market-based reforms have indeed begun to yield measurable results.

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According to him, foreign exchange volatility has been reined in somewhat, there is now an enhanced coordination between fiscal and monetary authorities, which have helped to restore stability to the naira, persistent external pressures notwithstanding.

Compared with the situation in other emerging markets, Cardoso stated, depreciation level of the Naira had remained modest, thereby making it more competitive.

Stability in the currency, he informed is critical in confidence building and investor interest, as it an indicator of predictable investment environment.