Dwindling foreign reserves, no cause for panic – Emefiele

Godwin Emefiele, the Governor of the Central Bank of Nigeria, has asked Nigerians not to panic as the nation’s  Foreign Reserves drops to lower level. Emefiele said this while fielding questions from newsmen after the Monetary Policy Committee meeting in Abuja. Nigeria’s Foreign Reserves had dropped from about $40 billion to $39.3 billion in recent weeks. The CBN governor said the drop in the reserves was not enough to create panic.

He said: “During the period when we had economic crisis in 2015, 2016 and early 2017 where reserves dropped to $23 billion, the country managed it and it survived. We do know that there is 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 per barrel, notwithstanding the drop in reserves below $40 billion, should not cause any panic.” On CBN’s intervention in the foreign exchange market, Emefiele, however, noted that the apex bank’s policy of sustaining exchange regime would continue.

He said: “There is no where 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. Investors and exporters windows trade at 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.” The Governor, however, said the only way the bank intervened in the market was either to buy dollars if the rate was low at level where the bank felt it wanted to buy. He added that the apex bank often sells inline with its managed float regime, which was currently being run by the CBN. According to him, engaging in this did not amount to a peg as it is insinuated by some people.