The gap-closing in foreign exchange from January to June has been commended by The Governor of the Central Bank of Nigeria(CBN), Olayemi Cardoso.
Cardoso revealed that official and BDC rates had narrowed significantly from N162.62 in January to N47.22 in June 2024 while briefing the Senate Committee on Banking, Insurance and other Financial Institutions.
He disclosed this on Friday in Abuja, adding that there were successful price discovery, increased market efficiency, and reduced arbitrage opportunities across sectors in the economy.
The CBN Governor also revealed some statistics which showed improved growth and stability in the nation’s economy.
Cardoso said: “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June 2024, indicating successful price discovery, increased market efficiency, and reduced arbitrage opportunities.
“The stock of external reserves increased to US$36.89 billion as of July 16, 2024, compared with US$33.22 billion at end-December 2023, driven largely by receipts from crude oil related taxes and third-party receipts.
“In Q1 2024, we maintained a current account surplus and saw improvements in our trade balance.
“Our external reserves level as at end-June 2024 can finance over 11 months of import of goods and services, or 14 months of goods only. This is significantly higher than the prescribed international benchmark of 3.0 months, indicating a strong buffer against external shocks.
“The banking sector remains robust and diverse, comprising twenty-six commercial banks, six merchant banks, and four non-interest banks. Key indicators such as capital adequacy, liquidity, and non-performing loan ratios all showed impressive improvements, underscoring the sector’s growing stability and resilience.
“The equity market has shown impressive performance, with the All-Share Index rising by 33.81 per cent and market capitalization expanding by 38.33 per cent from December 2023 to June 2024, reflecting growing investors’ confidence.
“While we are encouraged by these positive trends, the CBN remains vigilant and committed to implementing policies that support sustainable growth in our financial markets, while maintaining overall economic stability.”
The governor of the apex court disclosed that some plans had been mapped out to manage the inflation.
He said: “To combat inflation, we have implemented a comprehensive set of monetary policy measures.
“These include raising the policy rate by 750 basis points to 26.25 percent, increasing Cash Reserve Ratios, normalizing Open Market Operations as our primary liquidity management tool, and adopting Inflation Targeting as our new monetary policy framework.
“In the area of banking supervision, the CBN has taken decisive actions to ensure the safety, soundness, and resilience of the banking industry.
“Key measures include intervention in three banks, revocation of Heritage Bank’s license, increasing minimum capital requirements, and enhancing AML/CFT supervision.
“We also introduced new frameworks for Cash Reserve Requirements and cybersecurity and prohibited the use of foreign currency collaterals for local currency loans.
“We are in the process of reviewing the Bank’s micro and macroprudential guidelines to reinforce the resilience of financial institutions in Nigeria to withstand tightened conditions, thus creating a secure and attractive investment climate.
“We have signaled our plans to re-capitalize deposit money banks in Nigeria to improve capital inadequacy and their capacity to grow the economy.
“Our ultimate goal is to create a more stable, resilient, and efficient financial system that can better serve the Nigerian economy, while adhering to international best practices.”
The essence of the interface, according to the Chairman of the Senate Committee, Senator Adetokunbo Abiru, “is to update the Committee on efforts, activities, objectives and plans of the Bank with respect to monetary policy.”
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