Nigeria’s external reserves have hit over $41 billion, the highest since Yemi Cardoso, the Central bank Governor was appointed into office on September 15, 2023 by President Bola Ahmed Tinubu.
Data from the Central Bank of Nigeria, CBN showed that the external reserves rose steadily to $41.046 billion from $37.21 billion at the end of June.
According to checks, it’s also the first time the country’s external reserve has risen to that figure in four years, after suffering serious depletion under the administration of former President Muhammadu Buhari.
Under the administration, the nation’s forex reserves fell to as low as $3.7 billion as at the end of 2022, according to JP Morgan, the renowned global financial services firm which claimed that the federal government had been economical with the actual state of the nation’s external savings under the Buhari administration.
The reserves however picked up under the Tinubu’s administration after the government said it has paid some backlog of foreign and promised debt, owned by the Buhari’s government to creditors including JP Morgan.
Last year, following a steady decline in the reserves, some analysts claimed that the CBN was using the reserves to defend the naira, saying the action was responsible for the stability that the currency has enjoyed.
Reacting, Cardoso denied the claim insisting that the apex bank’s key monetary policies salvaged the naira from devaluation, compared to other foreign currencies.
The CBN governor who spoke at the Spring Meetings of the International Monetary Fund, IMF, and the World Bank, said the naira is performing independently and not because the foreign reserves were being used to defend it.
Cardoso said, “Defending the Naira, from every indication is an elephant in some rooms. I will make this as clear as possible. It is not our intention to defend the Naira. Much as I have read in the recent few days some opinions about what has happened in terms of our reserves being drawn down, and the CBN Defending the Naira, if you take your mind to our philosophy and policy, you will see it will be counterintuitive.
“We want the Naira to perform independently as long as we have a vibrant forex market.
“Initially we needed to keep the BDCs going. So it is important for people to get forex for school fees, travel and the like.”
The CBN governor stressed that the depletion of the foreign reserves was due to the settling of some of the country’s obligations.
“The shift you see in our reserve is not to defend the Naira but for things like settling obligations that fell due. Mind you, that is the reason for keeping foreign reserves, in the first place,” he said.
Meanwhile, business analysts insist that so long the CBN continues to tighten the monetary policies, the forex reserves will be on a rising trajectory.
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