The Governor of Central Bank of Nigeria,CBN, has hinted that pump prices of Premium Motor Spirit (PMS) petrol will moderate this year as government and private-owned refineries begin operation.
He spoke on Wednesday, January 24, at the launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report in Lagos.
Cardoso said the expected stabilisation or reduction in fuel costs is poised to have far-reaching implications across various sectors, contributing significantly to overall economic efficiency and resilience.
While Dangote Refinery has already commenced production, the Port Harcourt Refinery is expected to begin production anytime from now.
Cardoso said the apex bank, the Ministry of Finance and the NNPCL have collaborated to ensure that all FX inflows are returned to the Central Bank to boost reserves accretion.
He described the naira, which exchanges around N1,370 to the dollar at the parallel market as undervalued.
“We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term,” he said.
In summary of the NESG 2024 Macroeconomic Outlook Report in Lagos, the Chief Economist at NESG, Dr. Olusegun Omisakin, listed some economic outcomes of achieving a stable and appropriate pricing of the exchange rate in Nigeria.
The NESG report advised that stabilising the exchange rate through a functional and transparent foreign exchange market entails enhancing market liquidity through regular auctions, reducing administrative restrictions, and ensuring efficient allocation of FX reserves.
“Adopting a managed float system, regulating speculative activities, and encouraging foreign investments would bolster market confidence. Besides, access to FX needs to be realigned to facilitate international trade and transactions – as such, local access needs to be to the limit of the Naira equivalent. Reinforcing monetary policies for inflation control and export diversification would promote currency stability,” the report advised.
“Adopting a managed float system, regulating speculative activities, and encouraging foreign investments would bolster market confidence. Besides, access to FX needs to be realigned to facilitate international trade and transactions – as such, local access needs to be to the limit of the Naira equivalent. Reinforcing monetary policies for inflation control and export diversification would promote currency stability,” the report advised.
