The Central Bank of Nigeria (CBN) announced that the country’s external reserves have risen to $40.2B as of October 18, 2024, a boost in reserves providing Nigeria with the ability to cover 14.5 months of imports for goods and services or 18 months for goods alone, as highlighted by Mr. Muhammed Abdullahi, CBN’s Deputy Governor for Economic Policy.
Abdullahi also revealed that foreign exchange (FX) inflows reached $57B by August this year, coupled with capital importation nearly doubling, reaching $6.9B as of August 2024 compared to $3.9B for the entire year in 2023.
CBN’s interventions in the FX market have decreased significantly, currently making up just about 5% of market turnover. Although the bank might still intervene occasionally, the ultimate goal is to avoid creating dependence on such interventions.
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Starting in December, a new “matching system” will be introduced in the FX market, which will give traders the opportunity to see exactly who is selling or buying. Mr. Abdullahi highlighted that this will bring transparency and stability to a market that has faced challenges for over a decade.
Mr. Olayemi Cardoso, CBN Governor, assured investors that the current FX policies will make it easier for both Nigerians and foreign investors to bring foreign exchange into the country, saying:
“The issue of confidence of Nigerians in their currency, clearly a situation where interests have gone up, we expect that and it is happening that there will be more interest in the local instrument.”
“We find that something that is important for this whole adjustment arose from the fact that now, Nigerians will be more inclined to produce locally because it is a lot cheaper for them to do so rather than depend on imported goods. That is a good thing.”
“Then regarding the harmonization of the rates, those who used to send money to Nigeria no longer have the choice of having to find other unorthodox methods of sending their money home.
“I particularly refer to the remittances from the Diaspora. That is why we have had a major uptick in the level of inflows coming from that area.”
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