Nigeria’s foreign exchange reserves, which come to $35.4 billion, are adequate to meet import needs and services for seven months, Godwin Emefiele, the Central Bank of Nigeria (CBN) chief told bankers Friday night.
Emefiele said in Lagos at a dinner arranged by the Chartered Institute of Bankers of Nigeria that the twin factors of foreign portfolio investors exit from the Nigerian economy and fall in crude oil proceeds weighed on forex availability in the country.
Africa’s biggest economy has seen its external reserves deplete by around 3% since May when it touched $36.6 billion, having recovered from April lows, triggered by a record oil crash and the pandemic outbreak.
The CBN has twice conducted two devaluation rounds on the naira twice this year, the first in April when the exchange rate of the local currency was modified from N307 to N360 per dollar at the official market, the other in August when the rate of exchange was changed from N360 to N380.
Mr Emefiele said of the first that it was not a devaluation but an “adjustment of price.
With the decline in our foreign exchange earnings and successive exchange rate adjustments, the CBN has continued to implement a demand management framework, which is designed to bolster the production of items that can be produced in Nigeria, and aid conservation of our external reserves,” Emefiele said.
“Due to the unprecedented nature of the shock, we continued to favour a gradual liberalisation of the foreign exchange market in order to smoothen exchange rate volatility and mitigate the impact which, rapid changes in the exchange rate could have on key macro-economic variables.”