CBN: No cause for alarm over drop in foreign reserves

Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), says there is no cause for alarm in the drop in the country’s foreign reserves.

Emefiele was answering questions from journalists at the end of the two-day meeting of the monetary policy committee (MPC) in Abuja on Tuesday.

The foreign reserves have dropped to $39.8 billion dollars on Monday from $40.6 billion on October 25.

The CBN governor said the drop in the reserves was not enough to create fear.

“During the period when we had an economic crisis in 2015, 2016 and early 2017 where reserves dropped to 23billion dollars, the country managed it and it survived,” he said.

“We do know that there is a focus on the fact that crude oil price is not as resilient as it was in 2018.

“We believe that crude oil price today at 63 dollars per barrel, notwithstanding the drop in reserves below 40 dollars should not cause any panic.”

Emefiele, however, said the apex bank’s policy of sustaining exchange regime would continue.

“There is nowhere you are going to find the hand of CBN intervening in the determination of the exchange rate. It is not the right statement for anyone to say that there is peg on the naira,” he explained.

“Investors and exporters windows trade at the market, as you know that the price at that market is not fixed, the price varies from N359 sometimes trade upward as high as N364.

“And as more inflow comes into the market, the price trade downwards. To say there is peg in naira is misleading.”

According to the governor, the only way the bank intervened in the market was either to buy dollars if the rate was low at a level where the bank felt it wanted to buy.

He added that the apex bank often sells in line with its managed float regime which was currently being run by CBN.

According to him, engaging in this did not amount to a peg as it is insinuated by some people.