Cardoso: Naira Needs Competition, Not Protection

Central Bank of Nigeria Governor Olayemi Cardoso has said the naira needs competition in the foreign exchange market, not protection. He made the remarks after the International Monetary Fund (IMF) stated last month that the naira remains significantly undervalued despite recent gains against the United States dollar across official and parallel foreign exchange markets.

Reserves Rise, PMI Returns to Expansion

Highlighting improvements in broader macroeconomic indicators, Cardoso said Nigeria’s gross external reserves rose to $52.52 billion as of July 17 from $50.47 billion at the end of May. That level is enough to cover about 11 months of imports. The Purchasing Managers’ Index (PMI) also returned to expansion territory at 50.1 in June, signaling a pickup in business activity.

Demand and Supply Drive Currency Circulation

Cardoso addressed questions about the low circulation of coins and smaller denominations. “The question as to why we do not have as many of them in circulation as may be perceived that some would want is a question of demand and supply,” he said. He added that the ecosystem is moving toward financial inclusion, where digitisation is becoming increasingly important. “So, if there is no need for coins or for lesser denominations,” he noted, implying that digital transactions reduce the need for physical cash.

For Nigerian businesses and consumers, Cardoso’s stance signals that the CBN will continue to allow market forces to determine the naira’s value rather than intervene to prop it up. This means exchange rate volatility may persist in the near term, but the policy aims to attract foreign investment and strengthen the economy over time.