Foreign reserves in healthy rise to $32bn says Emefiele

Nigeria’s foreign exchange reserves have risen sharply to about t$32 billion on the back of astute management by the Central Bank it was revealed yesterday.

Central Bank Governor Godwin Emefiele said Nigeria’s foreign-exchange reserves level reached $31.9 billion on Tuesday in yet another sign that the apex bank’s foreign exchange management policy is working.

The Central Bank of Nigeria Governor reiterated on that foreign exchange controls were helping to stabilise the naira and replenish reserves, amid criticism the measures are harming the economy.

“These policies have led to a significant stabilisation in the exchange rate and an improvement in market sentiments,” Emefiele said in a speech to Nigeria’s Senate in the capital, Abuja.

The measures, coupled with efforts by the five-week old administration of President Muhammadu Buhari to cut wasted spending “have seen our foreign exchange reserves begin a gradual recovery,” he said.

The central bank started restricting currency trading in December in a bid to stem the fall of the naira as the price of oil, Nigeria’s main export and source of two-thirds of government revenue, plunged.

Last month, the central bank banned importers of about 40 items including toothpicks, private jets and wheelbarrows from using official foreign-exchange markets in a bid to curtail frivolous demands and the move has won wide acclaim.

The central bank has “zero tolerance for speculators,” Emefiele said in the speech. “Nigeria’s foreign reserves remain our common wealth and we must all strive to work together to protect it and prevent speculators and rent seekers from plundering it.”

While the measures have stabilised the naira at an average of N199.03 per dollar since the start of March, they have left it overvalued and caused investors including BlackRock Inc. and Aberdeen Asset Management Plc to shun local bonds and stocks until there’s a devaluation. Naira forwards indicate the currency will depreciate to 248.50 per dollar in a year, while the black market rate fell to 230 last week.

Nigeria needs to let the naira devalue as the restrictions are starting to harm growth in Africa’s largest economy, Bisi Onasanya, the chief executive officer of the country’s biggest lender by assets, First Bank of Nigeria, said in an interview with Bloomberg last month.

Emefiele said the curbs on importers were necessary to boost Nigerian manufacturing.

“At the heart of the issues that currently confront our nation is the need for us to diversify the structure of our economy from being import dependent to being an economy that produces what she consumes,” he said.

Hope Moses-Ashike and OWEDE AGBAJILEKE