TheCable

Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), says the naira is undervalued largely due to distortions by perpetrators in the foreign exchange (FX) market.

He spoke on Tuesday after heading his first monetary policy committee (MPC) meeting of the apex bank.

Cardoso said there is a technical side causing the undervaluation of the naira, adding that CBN has done its calculation.

“As far as I can see, the softer side is what results in some of the things that I had mentioned earlier and that is distortion,” Cardoso said. 

“To the extent that a market is not functioning effectively and is distortionary in outcome. 

“My view certainly cannot be what it is and that is why I said that.

“For me, it was a challenge to ensure that we remove those distortions and some of the distortions we are seeing is some of the manipulation that has been taking place.”

He said an investigation into the manipulation is ongoing, “so I will not be able to say too much on it unfortunately”.

“As and when we come up with these distortions, we will take them off and throw them away and where there are distortions that come about as a result of bad behaviour, we will ensure  that those who do it will face the music as a deterrent to ensure that others in future do not take that route,” the CBN governor said. 

He added that such perpetrators confuse the FX market.

Meanwhile, Cardoso also said $400 million has been paid on Tuesday to settle some outstanding foreign exchange (FX) commitments.

The payment reduced the FX backlog to $1.8 billion from $2.2 billion he mentioned on February 5.