The nation’s external reserves have hit $34bn from $33.6bn attained on October 25, the Central Bank of Nigeria has stated.....
The reserves have been appreciating very fast after hitting $32bn on September 18.
The Deputy Governor, Financial System
Stability, CBN, Dr. Joseph Nnanna, who disclosed the latest figure in
Lagos on Saturday, said the exchange rate stability achieved so far by
the apex bank had come to stay.
He expressed confidence that the usual
end-of-the-year rush would not push up the naira-dollar exchange rate
contrary to some people’s expectations.
The CBN deputy governor said this while
fielding questions from journalists at a forum organised by the
Chartered Institute of Bankers of Nigeria.
Nnanna was among the chief executive officers of companies who were conferred with the CIBN Fellowship Awards.
Asked if the exchange rate would go up
as the end of the year was approaching, Nnanna said, “No, the rate will
not go up, take it from me. We have achieved stability and the stability
is here to stay.
“The sustainability is already evident,
the reserves are growing. As I speak, the reserves are $34bn. When we
had volatility, the reserves were as low as $20bn. But let me say one
thing: Nigeria can make do with a reserve level of $20bn but it is the
press who gives the impression that if the reserves fall below $30bn,
then there is a problem.
“No, there is no problem. All we need to
manage the economy and manage it properly is reserves that can cover at
least three months of import. And in fact, as it is, $10bn or $12bn can
give us reserve coverage of four months.”
The CBN chief said the Investors and
Exporters foreign exchange window had performed beyond the bank’s
expectations, adding that forex inflows in the past few months were
huge.
Nnanna stated, “Our exchange rate is
convergent; we are getting southward. In the IMF, they talk about the
need to have one rate. The one rate can happen organically or
inorganically. For us at the CBN, we believe that organic convergence is
the way to go. Inorganic convergence, which is forced, will always
produce an arbitrage and that we don’t want.
The President, CIBN, Prof. Segun
Ajibola, said a flexible exchange rate was helpful in an environment
that lacked hiccups in forex management and supply strategies.
He stated, “But in an environment that
is so susceptible to the vagaries of foreign exchange market, in terms
of inflow of foreign exchange income and over-reliance on basic items
for importation, you run the risk of allowing the exchange rate to go to
the rooftop, if you free it absolutely.
“Normally, you hardly find any economy
where the foreign exchange management succumbs totally to the forces of
demand and supply. The best that we have seen is managed floating, which
is what the Central Bank of Nigeria introduced in February this year.
But as the economy stabilises and is diversified, and as we see more
sources of forex earnings stabilising, especially the non-oil export,
then we can be more and more flexible in our foreign exchange management
policy.”’
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