Olayemi Cardoso, the Governor of the Central Bank, discussed the recent utilization of the nation’s foreign reserves in clearing debts owed to international creditors, rather than for the defense of the Naira as commonly believed.
This revelation was made during the ongoing International Monetary Fund Spring Meetings in Washington D.C on Wednesday.
Concerns were raised by Nigerians regarding the significant decline in the country’s exchange reserves, which dropped by approximately $2.16 billion in a span of 29 days, despite strong efforts to stabilize the Naira.
Data from the CBN website indicates that as of April 15, 2024, the FX reserves stand at $32.29 billion, showing a noticeable decrease from the $34.45 billion reported on March 18, 2024.
This decline, the lowest in six years, signals the conclusion of a period of consistent growth, where the reserves saw a surge for 43 days, accumulating $1.28 billion between February 5 and March 18, 2024
However, Cardoso clarified during the event that the decrease in foreign reserves is primarily attributed to debt repayments, ongoing obligations, and regular business operations as witnessed in other nations.
He emphasized that there are no intentions to utilize the external reserves in defending the currency, as it would be counterproductive.
In his remarks, Cardoso stated, “I want to emphasize this point clearly – our objective is not to safeguard the Naira. Despite recent speculations about our reserves and the central bank’s defense of the Naira, it is important to note that the shifts in our reserves are typical of any country, where debt payments and other obligations are met to uphold credibility.”
More details to follow…