CBN has no intention of defending the naira with foreign reserves. — Cardoso
The value of the naira has increased in relation to the dollar in recent weeks, rising by more than 40%, from roughly ₦1,900/$ to roughly ₦1,000/$1.
Yemi Cardoso, the Nigerian Central Bank Governor
According to Central Bank of Nigeria (CBN) Governor Olayemi Cardoso, the nation is not defending the naira with its foreign reserves.
During her speech at the International Monetary Fund-World Bank Spring Meetings in Washington, DC, on Wednesday, April 17, 2024, Cardoso revealed this.
According to the head of the CBN, Nigeria’s reserves have increased by $600 million in the last two days.
In response to assertions on social media that the central bank uses foreign reserves to defend the country’s currency, which has led to the recent strengthening of the Nigerian naira against the US dollar, Cardoso made this statement.
The value of the naira has increased in relation to the dollar in recent weeks, rising by more than 40%, from roughly ₦1,900/$ to roughly ₦1,000/$1.
But even as the value of the naira rises, Nigeria’s foreign reserves continue to decline, reaching a record low of $32.29 billion on April 15—the lowest level in more than six years.
The story that the governor of the CBN is depleting reserves to support the naira was reinforced by the decline in foreign reserves.
Cardoso clarified this on Wednesday, stating that the change in foreign reserves is unrelated to the appreciation of the naira.
“What you’ve observed regarding the change in our reserves is typical in any nation’s reserves where, for instance, debt is due and payments must be made; they are made because that is also part of maintaining your credibility,” the speaker stated. Occasionally, funds are received and used again. From yesterday to today, around $600 million was deposited into the reserves account. We seek a self-regulating market with willing vendors and buyers as well as price discovery.
“Defending the naira has barely anything to do with the shift in our reserves, and that is definitely not our objective.”
