CBN: Cardoso, Gives An Insight On Nigeria’s Dwindling Foreign Reserves

By Elizabeth  Chukwuma

This is not the best of times for Olayemi Michael Cardoso, current governor of Central Bank of Nigeria, CBN, over the depletion of the country’s foreign reserves between May 29, 2023 and now. The argument of the critics was that the Nigeria’s  Foreign Reserve  has dwindled , dropping to about $2.29 billion  as at April 15, 2024, described as the lowest level in the history of Nigeria over the last six years.

 The argument making the rounds was that the apex Bank governor, who has the backing of President Bola  Ahmed Tinubu, who incidentally was a former governor of Lagos state, had used the county’s Foreign Exchange Reserves to defend the naira , which had continued to appreciate at he country Autonomous Foreign Exchange Market, AFEM.

But the apex Bank governor would not take it from the critics. The Lagos state former Commissioner of Economic  Planning and Budget, under Tinubu’s Administration as a former  governor of Rivers state had said that  the government the Foreign had not used the nation’s Foreign  reserves ‘’to defend  the naira’’.

The former Lagos state Commissioner   may have taken advantage of the World Bank / International Fund Monetary Fund, IMF,   Springs Meetings,  in the Northern American country of the United States, US,  speak out about the nation’s foreign reserves  stating that ‘’it is normal’’.  He had said that if there is any shortfall in the country’s foreign reserves, it has to do with the payment of the country’s foreign debts because that is part of keeping its credibility with the Multi-lateral Financial International Financial Institutions.

Given an insider information the CBN governor, had revealed that the government had used part of the Reserves to the over $ billion Foreign Exchange backlog inherited from the previous Administration ‘’to restore the confidence of investors, both foreign and local, to the country’s economy stressing that the Bank Authorities had’’ to reach out to various stakeholders to make this a reality’’.

He was said to have made it clear to those that cares to listen that there is no way the Tinubu’s government would have allowed the country’s foreign reserves to be used  to  defend the naira . H e noted that the government is ‘’ looking towards a market that operates itself, willing FX buyers, sellers   and price recovery.  


He may have shocked Nigerians when he revealed that in two days, $600 billion had entered into the country’s Foreign Exchange Reserve Account.  He was emphatic that the shift in the country’s Foreign Exchange Reserves has ‘’little or nothing to do with defending the local currency, insisting that ‘’it is not the objective of the present Administration’’.

Here him: The era of intervention in the Sales of Forex to the Financial Institutions and other dealers was gone as it was not the core responsibility of the CBN.  This may have informed why the naira had continued to appreciate over the last two months, as Goldman Sachs Economists, had described it as the best performing in the Forex market in the month of April 2024, predicting that that the Nigerian Local currency  will exchange below  N1,000.00   to the US dollar in the coming months  because of the country’s economic realities.

 However, Data  from FDMQ,  on Thursday, April 18, 2024, shows that te indicative  exchange rate  for NAFEM had  increased  to N1,154.00 to the US dollar  from the  NN1,074.72 , traded  on Wednesday, April 17, 2024,  to the American dollar, meaning a drop in the value of the naira.

Notwithstanding the recent appreciation of the US dollar, in both NAFEM and parallel, popular, Black Markets, Bureau de Change, BDC, operators had given an insight why the naira had continuously gained against the US dollar in the months of March and April, 2024.

Aminu Gwadabe, President, Association of Bureau de Change Operators in Nigeria, ABCON, had attributed the naira surge to the various Bonds that had been sold by the CBN’S OMO auctions. Recall that last March, the Regulatory Financial Authority was said to have issued Treasury Bills and embarked on OMO Operations with high interest rates.

Only recently,  the apex Bank,  was said to have sold  N1.06 trn  worth of OMO Bills , with interest rates  as high as  21.5%.   The apex Bank was said to have also received additional bids totaling N1.14 trn, as a way to strengthen the naira.

ABCON, President had said that ‘’the oversubscription of the recent Government’s Bonds and other securitie’’s had impacted positively on the naira against the US dollar, in several ways.  The ABCON President may have gladdened the heart of Cardoso, the CBN, governor, over the sustained appreciation of the naira in the recent months when he disclosed that ‘’the plethora of reforms, that had been embarked upon by the apex Bank over the last 10 months to control the inflationary rate of he country had boosted the value of the naira at both the NAFEM and the Parallel Forex Market.

Gwadebe, the ABCON, had stated that the bold initiative taken by Cardoso and his Management team, ‘’to reinstate  the DBC’s window  to deepen  the Forex Sales Market  had further  provided the arsenal  to protect the value of the naira.          

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