….Says $600m inflow recorded in 48hrs
From Uche Usim, Washington DC
Central Bank of Nigeria (CBN) Governor, Dr Yemi Cardoso, on Wednesday explained the reasons why the country’s foreign exchange reserves dipped in recent months, saying it was not an attempt to defend the naira but to boost FX liquidity in the Bureau De Change segment of the foreign exchange market.
The FX reserves dropped to $32 billion on Wednesday, in what many commentators said was a worrisome development that needed to be explained to avoid panic.
But Cardoso, at an interface with the media and other stakeholders at the ongoing IMF-World Bank Spring Meetings in Washington DC, said there was no cause for alarm as the nation’s economic ship was sailing in the right direction.
According to him, what the CBN has done to make the naira stronger is what many other jurisdictions have done, which is to step in and attain stability in a place volatility hitherto reigned.
“It is not our intention to defend the naira. Much as I have read in recent days as regards about what’s in our reserves, it’s not that real thing. If you think back to our overall strategy, you will know we’re running a willing buyer, willing seller market and in future, the CBN will hands off intervening unless in certain special circumstances.
“As long as we have a vibrant currency market, we don’t need any intervention.
“We needed to get that BDCs going to catalyse that part of the FX market so individuals have access to funds to help wards abroad and all that but it was not designed to defend the naira.
“The shift in our reserves is what you’ll find in all jurisdictions. About $600 million came in a few days ago to shore up the fx reserves.
“The shift has nothing to do with defending the naira and that’s not our objective”, he explained.
The CBN Governor further revealed that the reforms in the finance sector were already yielding positive results as the naira moved from the worst performing currency to the best in six months.
He also assured that the monetary policy and fiscal policy are on the same in battling inflation, achieving price stability and generally building a vibrant economy.
Cardoso asked anxious Nigerians to keep faith with the CBN as the journey to the promised land has begun but would not be a smooth one as there has been sedimented rot in the system that needs to addressed.
“We should be reasonable in our expectation as it won’t materialize overnight. Some of these things causing the pains happened a long time ago.
“We need to communicate where we are coming from and what we’re doing and where we’re going.
“We will keep strengthening the communication mechanisms to unbundle the issues so people will be carried along.
We will use many platforms to reach out because if your intervention does not impact the man on the street, you’ve done anything. We need to take everyone along”, he said.
Photo caption:
L-R The Permanent Secretary, Federal Ministry of Finance, Mrs. Lydia Jafiya; the Governor, Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso; the Director of the African Department at the International Monetary Fund (IMF), Abebe Aemro Selassie; and the Deputy Governor (Economic Policy), Central Bank of Nigeria (CBN), Mr. Muhammad Sani Abdullahi, on the sideline of the ongoing 2024 Spring Meetings of the IMF and the World Bank Group, on Wednesday.