Data on the website of the Central Bank of Nigeria (CBN) on Thursday showed a $2.309bn drop in foreign reserves in the first 30 days of October, 2018.
Within the period, the reserves level closed at $41.995bn, representing a 5.21% decline from $44.305bn on September 28, 2018; thereby returning close to the $41.926bn it last touched on February 23, 2018.
The October 31, 2018 figure also represented a more significant $5.87bn, or 12.26% fall from the year’s peak level of $47.865bn on May 10, 2018
Year-to-Date, Nigeria’s October-end reserves level closed $3.229bn or 8.33% up from $38.765bn on December 29, 2017; while year-on-year, the reserves is still up $8.17bn or 24.15% from N33.825bn recorded on October 31, 2017.
Speaking in Bali, Indonesia during the just concluded 2018 Annual Meetings of the World Bank and International Monetary Fund (IMF), CBN Governor, Godwin Emefiele, blamed the reserves depletion a conscious decision of the apex bank to defend the Naira against international currencies, using the nation’s reserves pool. This, he said, is a preferred route, rather than continually building the reserves and allowing the Naira’s free-float.
According to him, while not losing sight of the need to build buffers “I must say that we are in the period where it will be difficult to talk about building reserve buffers.
“We can only build reserve buffers if we want to hold on to the reserves and then allow the currency to go, and wherever it goes is something else.
“So, it is a choice we have to make and at this time, the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we do not create problems in the banking system,” he added
He spoke against the backdrop of the warning by the IMF for Nigeria to be cautious about the use of its foreign exchange reserves, as oil prices could decline at any time.
Photo Caption: Emefiele, the CBN Governor (left), Ms. Mary Uduk (middle), Acting Director-General, Securities & Exchange Commission (SEC) Nigeria and Mrs. Patricia Oniha, DG, Debt Management Office (DMO).