FX gap narrows to 4.5% amid financial reforms –Cardoso

From Adanna Nnamani, Abuja

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has said that Nigeria’s foreign exchange (FX) gap has significantly narrowed to 4.5 per cent from previous levels as high as 60 per cent.

According to a statement from the apex bank, Cardoso, who spoke at the inaugural conference on Emerging Markets Economies held in Al Ula, Saudi Arabia, attributed the progress to key financial reforms implemented under his leadership. The conference, jointly organised by the Saudi Ministry of Finance and the International Monetary Fund (IMF) Regional Office, served as a platform for policymakers and economic experts to address structural changes in the global economy.

The CBN boss explained that upon assuming office, his team prioritised addressing Nigeria’s foreign exchange challenges, including a huge backlog of forex transactions, currency depreciation, and low investor confidence.

He said that by introducing an electronic matching system to enhance transparency and establishing a foreign exchange code of ethics signed by all Nigerian banks, the CBN has fostered a more efficient and credible FX market.

These reforms, he noted, have led to Nigeria’s foreign reserves surpassing $40 billion, the highest level in nearly three years, and restored market confidence.

He explained that Nigeria’s shift towards orthodox monetary policies, including an 850 basis-point increase in interest rates over the past year, has played a critical role in stabilising the economy and narrowing the FX gap.

Cardoso also pointed to the removal of the fuel subsidy and the unification of exchange rates as crucial fiscal reforms that have improved Nigeria’s economic outlook.

He acknowledged that while previous administrations struggled with the political will to implement such changes, these measures have now positioned Nigeria for sustainable growth.

On the financial sector front, Cardoso highlighted the CBN’s directive for banks to recapitalise, ensuring a robust financial system capable of withstanding future economic shocks.

He further stressed the importance of digital financial services in expanding financial inclusion, particularly among underserved populations, and reiterated the CBN’s commitment to maintaining macroeconomic stability and policy consistency.

Cardoso also canvassed stronger economic ties with the Middle East and the Nigerian diaspora community in the region, noting that there were lessons to be learned from Saudi Arabia in terms of infrastructural development and tourism.

According to him, Saudi Arabia’s dedication to diversifying its economy through innovative environmental projects, large-scale transformation, and tourism investment is essential for development.

Cardoso also reaffirmed his dedication to collaborating with the Nigerian Diaspora community in the Middle East to improve remittance flows and strengthen Nigeria’s financial sector.

He stated that the CBN will continue enhancing macroeconomic fundamentals to establish an enabling environment that will facilitate the growth of the private sector and the generation of high-quality jobs for Nigerians.

Responding, Mr. Talal Al-Humond assured Mr. Cardoso that the Saudi Central Bank will work with the CBN to ensure the attainment of mutually beneficial objectives.