No cause for alarm over Nigeria’s $44bn foreign reserves – CBN

The Central Bank of Nigeria (CBN) has allayed worries over the
fluctuation in Nigeria's external reserves.

It assured that with its current level at over $44 billion, there is
no cause for alarm.

Speaking yesterday during CBN's special day at the ongoing 13th Abuja
International Trade Fair, the apex bank's Acting Director, Corporate
Communications, Isaac Okoroafor, said not only does the CBN have the
reserves to defend the naira, it is also sufficient to encourage small
businesses to produce to boost the economy.

He added that the country's current reserves level could support
between 17 to 20 months of import compared to the international
standard, which stipulated for at least three months of import to
remain at a comfortable level.

He further assured that the bank will continue to ensure that finance
is provided for all Small and Medium Scale Enterprises (SMEs) which
may require support to be able to produce and grow the economy.

His words: "I also want to make it clear: it's also on social media
that our reserves dropped by $1.45 billion in one month.

"We are not politicians, I want you to understand that the reserves
level is a moving figure; at times, it rises and other times, it comes
down. And as we speak, it's a little over $44bn."

Giving reasons for the fluctuation in external reserves, Okoroafor
said, "You'll recall that there was a time we survived on even $23.2
billion; the economy was running.

"Now, we are over $44 billion and the reason why it is going down
gently is because there's a global squeeze on emerging markets: the
Central Bank of the USA which is the FED had been raising interest
rate and you know international capital goes to where it earns better
returns.

"So, those who came into our economy to take advantage of the returns
here seems to have found better returns in the US- and it's not just
in Nigeria- it's happening to South Africa, Egypt, Pakistan, Iran,
Argentina, Brazil, Turkey even China.

"China has lost over 1.3 per cent of its currency, Argentina lost 134
per cent; Iran, India, some of them lost 18 percent, 17 percent- but
here in Nigeria, our currency has gained 6 percent in the last one
year.

"You can see that the reversal of capital flows which is eating most
economies and bringing about depreciation in their currency is not
affecting us for two reasons- we've built enough buffers of reserves
to be able to tackle situations like these.

"Secondly, we are using the reserves to defend the value of our
currency- so that also accounts for why it's dropping.

"Investors who brought in dollars- of course, we've a capital
importation policy- if you bring your dollars, when you're leaving, we
give it to you. And so they brought their dollars and they want to
leave to the US, we give them because our word is our bond and so that
has tended to make the reserves drop a little.

"At $44 billion, we still have between 17 and 18 months of import
cover, meanwhile, the international standard is three months of import
cover.

"We are very comfortable- we have the reserves to defend the value of
the naira, and we have the local support to also encourage our SMEs to
go into production."

The CBN director also seized the opportunity to counsel the trade fair
participants on how best they could access the various interventions
by the bank.
He said,"Unfortunately, we cannot do it (the financial interventions)
directly, we've to do it through banks.
"And that's why we say again, people who engage in business should
open an account with a bank, run that account and demonstrate that you
are in business.

"Once you keep your record and you show evidence that you are in
business, banks will always give you loans.

"But in a situation where people do not keep records, and there's no
difference between the money in their pocket ad their working capital,
it'll be difficult for banks to be able to do an examination and given
you loan."