Yemi Cardoso Highlights Importance of Currency Floating for Realistic Forex Market According to THISDAY Newspapers

Yemi Cardoso: The Importance of Currency Floating in Achieving a Realistic Forex Market

In a recent discussion with THISDAY Newspapers, Yemi Cardoso, a prominent financial expert, emphasized the critical role of currency floating in realizing a truly effective and realistic foreign exchange (forex) market. According to Cardoso, allowing the currency to float freely is essential for aligning the forex market with the actual economic conditions, fostering transparency, and encouraging foreign investments.

Cardoso highlighted that a free-floating currency system, where the exchange rate is determined by the market forces of supply and demand, can significantly enhance the flexibility and resilience of a country’s economy. This system enables the currency to adjust naturally to economic shifts, reflecting the country’s trade balance, inflation rates, and overall economic health more accurately.

Moreover, Cardoso pointed out that a floating currency can help mitigate the risks associated with fixed or pegged exchange rate systems, which are often vulnerable to external shocks and speculative attacks. By allowing the currency to fluctuate, countries can avoid the pitfalls of maintaining artificial exchange rates, which can lead to imbalances and economic distortions.

In addition to enhancing transparency, a floating currency can also attract foreign investors by providing a more predictable and stable investment environment. Investors are more likely to commit capital to economies where currency values are reflective of market realities, thus boosting foreign direct investment and contributing to economic growth.

Cardoso also stressed the importance of implementing supportive monetary and fiscal policies to complement the floating currency system. He suggested that central banks should maintain a careful balance between intervention and market freedom, only stepping in to prevent extreme volatility that could destabilize the economy.

Furthermore, Cardoso advocated for the development of robust financial infrastructure and regulatory frameworks to support the transition to a floating currency system. This includes ensuring transparency in forex transactions, improving data collection and analysis, and fostering financial literacy among market participants.

In conclusion, Yemi Cardoso’s insights underscore the significance of floating currency systems in achieving a realistic and effective forex market. By embracing market-driven exchange rates, countries can enhance economic stability, attract investment, and better position themselves in the global financial landscape.