The Nigeria’s foreign reserves has risen to US$39.12 billion, representing 12.74% increase as of October 11, 2024, from US$34.70 billion at the end June 2024, the Central Bank of Nigeria
(CBN) Governor, Yemi Cardoso, has said.
Cardoso, who stated this at an interface with the House of Representatives Committee on Banking, said the increase was driven largely by foreign capital inflows, receipts from crude oil related taxes and third parties.
The apex bank’s governor also told lawmakers that the foreign exchange reserves have grown significantly with remittance flows, currently representing 9.4 per cent of total external reserves.
Cardoso said the current external reserve position can finance over 12 months of import of goods and services, or 15 months of goods only.
“This is substantially higher than the prescribed international benchmark of 3.0 months, so reflecting a robust buffer against external shocks,” he said.
The CBN governor said inflation trended upward, driven largely by high food prices, cost of energy and legacy infrastructural challenges, but it commenced deceleration from 34.19% in June 2024 and to 33.40% in July 2024.
He said the moderation in inflation became more pronounced in August 2024, as headline inflation further eased to 32.15%, adding that it was largely attributed to monetary policy measures taken by the apex Bank.
“With aggressive monetary policy tightening coupled with robust monetary- fiscal policy coordination, inflation is expected to further trend downward in the near-to-medium term,” Cardoso said.
He said to combat inflation, the apex bank had fully reverted to orthodox monetary policy approach and implemented a comprehensive set of monetary policy measures.
According to him, these included, “raising the policy rate by 850 basis points to 27.25%, increasing Cash Reserve Ratios and normalising Open Market Operations as our primary liquidity management tool.
“In addition, we have adopted an Inflation-Targeting (IT) monetary policy framework as part of the Bank’s Enterprise Strategy (2024- 2028). The IT framework, widely adopted across various global economies, is renowned for its effectiveness in combating persistent inflation.
“These integrated measures are aimed at stabilizing prices, optimizing liquidity management, and engendering an effective monetary policy framework.
“Regarding the foreign exchange market, the the Bank implemented various reforms including a unification strategy, which streamlined various exchange rate windows into a single model, adopting the ‘Willing Buyer, Willing Seller’ approach to enhance FX liquidity and financial market stability.”
He said the bank’s recapitalisation policy has prompted commercial banks to strengthen their financial positions, a process expected to result in a more robust and resilient banking sector by March 2026.
Cardoso said the policy was expected to support the realisation of US$1 trillion economy by 2030.
“One of the key measures include the recapitalisation of the banking sector by raising the minimum capital base to support the $1 trillion economy envisioned by the Federal Government of Nigeria (FGN) by 2030.
“Banks are required to meet these new thresholds by March 31, 2026, with several options available for reaching these targets.
“These options include issuing of new equities, engaging in mergers and acquisitions, or adjusting their operational licenses.”
In his remarks, the Chairman, House Committee on Banking Regulations, Hon. Mohammed Bello El-Rufai, commended the CBN governor for his relentless efforts in implementing policies aimed at stabilising the economy but harped on the need to do more to address the economic challenges of the country.
“Under your one-year stewardship, the CBN has implemented a series of ground- breaking measures aimed at enhancing market transparency, improving financial stability, fostering a more secure investment environment, and shifting towards a market-driven exchange rate regime, to restore confidence and stabilize the economy.
“On the exchange rate, I must commend the CBN on the unification of the foreign
exchange market, enhancing liquidity and reducing market distortions, dearing a $7 billion backlog of valid forex, reducing forex volatility, and increasing our external reserves significantly,” the lawmaker stated.
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