The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, delivered a positive outlook on Thursday, declaring that the country would experience a significant reduction in inflation and exchange rates in the coming year, 2024.
Cardoso shared this optimistic projection during an interactive session with the National Assembly joint committee on Banking, Insurance, and other Financial Institutions in Abuja.
Cardoso, addressing members of the joint committee, highlighted that despite facing challenges such as rising inflation and exchange rates, the domestic economy’s overall outlook for 2024 remains highly positive. He expressed confidence that both inflation and exchange rates would withstand fluctuating pressures and stabilize in the near future.
“The outlook for the domestic economy remains positive and expected to maintain the positive trajectory for 2024. Inflation pressures may persist in the short-term but are expected to decline in 2024. Exchange rate pressures are also expected to reduce significantly with the smooth functioning of the foreign exchange market,” stated Cardoso.
One key factor contributing to this positive outlook, according to the CBN Governor, is the unification of the exchange rate windows in June 2023. This strategic move aimed at reducing arbitrage, rent-seeking behavior, and speculation in the market, ushering in a new approach to exchange rate management.
Cardoso explained, “The policy aims at creating a market where the demand and supply of foreign exchange determine the exchange rate. The premium has narrowed, and our focus on increasing the autonomous FX supply would lead to more stability and further narrowing of the premium.”
Related: Naira Shows Resilience in Forex Market Despite Inflation Surge
Providing insight into the performance of the Nigerian Foreign Exchange Market (NFEM), Cardoso revealed that the total trade in the third quarter of 2023 stood at N18.804 billion. Notably, exports were valued at N10.346.60 billion, while total imports stood at N8.457.68 billion, reflecting a positive trade balance that is expected to boost external reserves.
However, Cardoso cautioned that due to domestic factors, the country should anticipate less revenue from oil exports in 2024. He attributed this expectation to a production limit of 1.78 million barrels per day (mbpd) in the coming year, highlighting challenges such as crude oil theft, pipeline vandalism, production shut-ins, and divestments by major oil companies as factors contributing to underperformance in meeting oil production targets.
In response, the Chairman of the joint committee, Senator Tokunbo Abiru (APC Lagos East), acknowledged the importance of the interactive session for statutory briefing by CBN, aligning with existing laws. The co-Chairman of the committee, Hon. Bello El-Rufai, also commended the CBN governor and the management team for their efforts in implementing measures to stabilize the economy.