The Central Bank of Nigeria, CBN, yesterday responded to the International Monetary Fund, IMF, propositions on judicious use of the nation’s external reserves to build buffers against the shock of rising interest rates in the monetary policy normalisation regime of the United States, saying CBN’s policy preference for now is to maintain exchange rate stability.
CBN Governor, Mr. Godwin Emefiele said this during joint press briefing of the Nigerian delegation to the World Bank/IMF 2018 meeting concluded yesterday in Bali, Indonesia. He also indicated that the Nigeria’s apex bank has performed relatively better than most emerging markets and third world central banks in the area of both exchange rate stability and reserves in the wake of the normalisation policy of the U.S.A.
Like other emerging countries, Nigeria’s external reserves has declined by $4.2 billion since July 5th, 2018 due to increased dollar sales by the CBN to forestall naira depreciation in the face of increased dollar demand from foreign portfolio investors exiting the nation’s financial markets in response to the rising interest rate in the U.S.A. and other advanced economies.
Several sessions of the Meetings have harped on the need for some pre-emptive measures, especially in building reserves by third world countries. The IMF Head, Emerging Economies Regional Studies Division, European Department, Anna Ilyina, had, last Wednesday, in a session at the just concluded International Monetary Bank / World Bank Annual Meetings in Indonesia, charged emerging economies including Nigeria, to build their external reserves as buffers against the normalisation policies which she said might be protracted. Read more:<<<<<