The Central Bank of Nigeria, CBN, has said that its prudent management of dollar demand and the Federal Government’s effort to plug leakages have increased the nation’s external reserves to $31.89billion.
Godwin Emefiele, CBN Governor’s revelation on Wednesday during a meeting with the leadership of the Senate, shows a rise of $3.79billion, representing 13 percent from the $29.1 billion President Muhammadu Buhari inherited on May 29.
But the $31.89 billion, which is the position of the reserves as at July 7, is below the $37.3 billion it was a year ago.
The apex bank has spent around $5 billion since last January defending the naira, which was hit by last year’s plunge in oil prices.
With “the strong efforts of Buhari to plug all leakages, as well as the vigilant demand management of the Central Bank, we have seen our foreign exchange reserves begin a gradual recovery,” the CBN governor said.
He said the CBN’s forex policies had led to a “significant stabilisation” in the exchange rate and an improvement in market sentiments.
The CBN, worried about rising inflation, has rejected another devaluation of the naira, after it tightened access to hard currency for the importation of a wide range of goods, to save reserves.
Since the new measures, the naira has weakened steadily on the parallel market, hitting a new record low of N233.50 to the dollar Wednesday.
On the interbank market, it traded near the Central Bank’s pegged rate of N196.95. Investors questioned how long the bank’s rate could hold there, when the currency was trading further and further away on the parallel market.
But Emefiele told the Senate that the country’s banking system was in good health and that financial market liquidity conditions were stable.
He explained that the 45 percent drop in crude prices and the depreciation of the naira from N155 to N197 made the CBN to take certain decisions to preserve the nation’s foreign reserves.
He said that some of the steps taken by the apex bank to strengthen the economy made it more conducive for Nigerians and foreign investors to be attracted to do business in the country.
“Since Nigeria does not exist in isolation, let me begin by drawing your attention to the rest of the world as you may all now be aware. The global economy has experienced three major shocks in the last one year.
“These developments include the significant and seemingly permanent fall in the price of crude oil, Nigeria’s main revenue earner; the end of the quantitative leasing programme of the Federal Reserve Bank of United States of America and the continued US-led sanction on Russia for its annexation of Ukraine,” Emefiele added.
He expressed appreciation that the Senate, after about three-hour deliberation with the CBN, endorsed the actions of the bank towards revamping the economy, stating that the actions are taken in the interest of the country.
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