Central Bank Governor, Olayemi Cardoso has clarified that the significant depletion of the country’s foreign reserves was as a result of the repayment of a backlog of debts and other obligations.
Additionally, the bank expressed its desire to minimize market participation and instead champion a situation where prices are determined by the interaction of willing buyers and sellers.Cardoso was speaking at the ongoing International Monetary Fund/World Bank Spring Meetings held in Washington D.C, United States.
He further stated that defending the currency with external reserves was counterintuitive and not part of the Bank’s strategy in strengthening the naira.
He said,” I want to make this as clear as possible, it is not in our intention to defend the naira. and as much I have read in the recent few days, some opinions with respect to what is happening with our reserves and if the central bank is defending the naira.
“What we have seen with respect to the shift in our reserves is the shift that you would find in any country where for example, debts are due and certain payments need to be made and they’re done because that is also part of keeping your credibility intact.”
Nigerians had expressed concerns after the country’s foreign exchange reserves plummeted by about $2.16 billion within a month amid efforts to stabilize the naira.
Figures from the CBN website revealed that as of April 15, 2024, the FX reserves had fallen to $32.29bn, a steep decline from $34.45bn about a month earlier.
The reserves had witnessed a $1.28bn surge between February 5 and March 18, 2024.