Foreign reserves rise to $40.2bn in October – Cardoso

Nigeria’s foreign reserves hit $40.2 billion in October 2024 from $38.4 billion reported in September.

This was disclosed by Olayemi Cardoso, Central Bank governor, during an investors’ meeting in Washington DC, the United States, on Wednesday.

Also at the meeting was Wale Edun, Nigeria’s minister of Finance and coordinating minister of the Economy, who also said that the country’s gross reserves are building organically due to the government’s decision not to defend the naira as was done in the past.

Edun emphasised the government’s commitment to maintaining transparency in the management of Nigeria’s foreign reserves.

Addressing a key concern about net reserves, Edun reassured investors that the government is committed to providing regular updates on the country’s reserve position. “We always get the net reserves question, and I think what we mentioned is that we are very committed to sharing that number very shortly,” Edun said. “We had given a timeline earlier in the year, and had said that hopefully by the end of this year, we’ll be able to share aggregated reserves, and we are committed to that.”

Edun explained that the decision to allow the market to set the exchange rate for the naira, instead of the Central Bank of Nigeria (CBN) defending it, has led to the organic growth of the gross reserves.

“The gross reserves are being built organically, mainly because we’re just not defending the naira, as used to happen in the past. A billion dollars every month just to defend the naira,” he pointed out, highlighting the high cost of past policies aimed at propping up the currency.

By letting the market play a greater role, Edun said that the government is also working to boost investor confidence and build buffers that would stabilise the economy. “We’re allowing the market as much as possible to set the level for the naira, and we are building the buffers to improve that confidence and ensure that we have enough input cover.”

According to him, the government’s goal is to improve the supply of foreign exchange organically without heavy intervention from the Central Bank. He acknowledged that while the CBN might still intervene in the market from time to time, the ultimate aim is to achieve a stable exchange rate without reliance on the central bank’s interventions.

“We’re trying as much as possible to improve our supply organically, without the central bank having to put in money all the time. And so we’re trying to get to a level where that stability is there without the central bank intervening or the market depending on the central bank.”

Edun also highlighted the positive impact that foreign portfolio investment (FPI) has had on the economy.

“We have had some significant amount of improvements in terms of flows from the relative side, foreign portfolio investment (FPI) have put in a significant amount,” he said.

He noted that the country has seen improved confidence among investors, with many willing to commit more resources to the Nigerian market.

“We’ve seen good response from investors through the FPI. We’ve also seen improved confidence for people who want to put in a lot more resources.

“We’re trying as much as possible to ensure that the market is not dependent on the interventions of the central bank and in terms of the levels of supply,” he said, noting that Nigeria has seen a positive response to Open Market Operations (OMO) auctions conducted after the Monetary Policy Committee’s meetings.