CBN bets on $41.4bn reserves for imports, foreign investments attraction
Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) has expressed confidence in the country’s foreign reserves that currently stands at $41.4 billion.
He said the current level of the reserves will cater for the next nine-month import demands as well as entice foreign investors to bring funds into the country.
Speaking at the Chartered Institute of Bankers of Nigeria’s (CIBN) dinner in Lagos, Emefiele said, “Supported by our demand management policy, in addition to support from the successful issuance of the $4 billion Eurobond and the IMF SDR, our external reserves today stands at over $41.4 billion, which is enough to support nine months of imports.
“This is not just a morale booster for both foreign direct and portfolio investors willing to invest in the economy, but it provides significant fire power to support our domestic industries that need to import critical machines and equipment for domestic production and exports.”
Checks by Business Metrics indicate that the nation’s external reserves fell by $610 million last month, according to figures obtained from the apex bank.
The reserves dropped to N$41.22 billion as of November 29 from $41.83 billion on October 29.
The data also showed that the reserves, which had gained $5 billion in October, returned to a downward path in November. The reserves increased from $36.78 billion on September 30 to $41.83 billion as of October 29.
According to Emefiele, a result of the drop in foreign exchange supply arising from low earnings from the sale of crude oil, the naira depreciated by 7.7 per cent from N380/$ to 410/$ at the I & E window.
He further added that supply was also affected by massive outflow of foreign portfolio investments from emerging and frontier markets, including Nigeria in 2020.
“A combination of these factors led to a marked drop in our foreign reserves from nearly $36.7 billion at the beginning of the crises in March said to a low of $32.9 billion in June 2021,” he said.
He said the volume of activities at the I&E window fell from nearly $250million – $300 million daily to less than $40 million in the first quarter of 2021.
