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Financial Services

CBN Governor says Nigeria’s external reserves sufficient to cover 7-months import

The CBN Governor has insisted that Nigeria’s current external reserves is sufficient to cover 7 months of imports of goods and services.

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The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has said Nigeria’s external reserves, which is currently at $35bn, is sufficient to cover 7 months of imports of goods and services.

This disclosure was made by Emefiele at the 55th Annual Bankers Dinner organized by the Chartered Institute of Bankers of Nigeria in Lagos on Friday.

READ: Why Nigeria’s external reserves is stuck at $35 billion

He pointed out that like other emerging market countries and countries that rely on earnings from oil exports, the decline in crude oil earnings, as well as the retreat by foreign portfolio investors, significantly affected the supply of foreign exchange into Nigeria.

Emefiele said, “Our external reserves currently stand above $35bn and are sufficient to cover seven months of import of goods and services.’’

‘’In order to adjust for the decrease in the supply of foreign exchange, he said the naira depreciated from N305/$ to N360/$, and subsequently to N380/$.’’

READ: Nigeria’s foreign debt has breached a 15-year trigger

“With the decline in our foreign exchange earnings and successive exchange rate adjustments, the CBN has continued to implement a demand management framework, which is designed to bolster the production of items that can be produced in Nigeria, and aid conservation of our external reserves.

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“Due to the unprecedented nature of the shock, we continued to favour a gradual liberalization of the foreign exchange market in order to smoothen exchange rate volatility and mitigate the impact which, rapid changes in the exchange rate could have on key macro-economic variables.’’

READ: IMF expects global GDP to shrink by 4.9% in 2020

“This we believe is in line with international best practices in countries where managed float arrangements are in operation,’’ he said.

The CBN Governor reiterated that the measures being put in place by the authorities to improve the non-oil exports and other sources of foreign exchange had helped to prevent a significant decline in the country’s reserves.

READ: IMF expects Nigeria’s GDP to shrink by 5.4% in 2020

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What you should know: External reserves management according to the CBN act, is guided by core objectives like providing a level of confidence to markets that a country can meet its external obligations, hedging the domestic currency, limiting external vulnerability and providing adequate liquidity to finance day-to-day official transactions and unforeseen needs.

This will also help the CBN maintain some stability in the foreign exchange market in the next few months. The continuous drop in the country’s external reserve will impact negatively in the forex market which has already been under intense pressure for some months.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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    Financial Services

    CBN freezes 194 bank accounts of Bureaux De Change firm, others

    This was disclosed by the apex bank, as it published the three court orders on its website.

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    parallel market, Covid-19: N3.5 trillion disbursed as stimulus package for the Nigerian economy, CBN Vs NESG: Waving the white flag for the benefit of Nigerians, Exchange Rate Unification: CBN devalues official rate to N380/$1, Nigerian banks have written off N1.9 trillion impaired loans in past 4 years, CBN sandbox operations, Stirling Trust Company Limited, Key highlights of the October 2020 Business Expectations Survey Report, A Total of N3.5 trillion was disbursed in the wake of the COVID-19 pandemic, in addition to several other interventions to reflate the economy - CBN, BOFIA 2020: Steps forward or backwards for Nigerian banks, Total credit to the economy rose to N19.54trillion – CBN Governor

    The Central Bank of Nigeria (CBN) has received orders from the Federal High Court, Abuja, to freeze 194 bank accounts owned by Bureaux de Change firms and other organisation to conduct investigations into suspicious activities.

    This was disclosed by the apex bank, as it published the three court orders on its website.

    The document, which was signed by the Presiding Judge, A.R. Mohammed, empowered the CBN to direct the banks to freeze all the bank accounts for a period of 45 days only, pending the outcome of the investigation.

    READ: CBN freezes 11 bank accounts of companies, individual

    It stated, “The order may be extended upon good reasons shown. Any person aggrieved by this order could apply to the court to have the order set aside, discharged or have the order reviewed for good reasons without waiting for the 45 days to lapse.”

    Some of the firms affected are Seasons Bureau De Change Limited, Sethwealth Ventures Limited, Sani Polo Global Investment Limited, Romvic Ventures Limited and Blue Beam Capital Limited among others.

    READ: Why Nigerian Crypto community is angry with CBN 

    See the court orders:

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    Sethwealth Ventures

    Sani Polo

    Blue Beam

    What you should know

    • The CBN on Wednesday had got an order to freeze 11 bank accounts to enable it to conduct investigations into suspicious activities, according to Nairametrics.
    • The order follows an exparte motion, dated March 12 and filed on March 16, seeking the mandatory order of the court to direct First City Monument Bank (FCMB) Limited to freeze all transactions on the listed accounts and all other bank accounts of the defendants for 180 days pending the outcome of investigation and inquiry currently being conducted by the CBN.

    Stanbic 728 x 90
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    Business News

    This decade will be bullish for Nigeria’s tech space – DLM Capital Group

    DLM Capital Group has announced its plans to expand into Nigeria’s million-dollar fintech sector.

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    Leading developmental investment bank, DLM Capital Group has announced its plans to expand into Nigeria’s million-dollar fintech sector, following its acquisition of Links Microfinance Bank.

    The license will give DLM Capital Group the mandate to operate small-scale banking services in Nigeria. This will also allow the launch of its star digital lending brand, Sofri, in the second quarter of this year. The acquisition, combined with the bank’s many fintech efforts already underway, will position it to deliver even more value for corporates and consumers.

    DLM Capital Group’s acquisition of Links MFB represents both an entry into new businesses and complementary enhancements to the institution’s existing subsidiaries.

    READ: Debt Service: Projects that we finance must generate revenue – DMO

    First, this prospect opens new market opportunities for the bank on the African continent.

    Second, the acquisition will enable the institution to exit its ‘legacy bank’ visibility and work more closely with the fintech community to build a ‘challenger bank’ brand that proffers innovative technological solutions for the Nigerian market.

    What they are saying

    The Corporate Communications Manager at DLM Capital Group, Chinwendu Ohakpougwu stated:

    “We are particularly excited about our acquisition of Links MFB and how it enhances the growth trajectory of our business. This highly strategic acquisition represents another significant milestone for us on our journey as a resilient and well-capitalized financial institution with advanced scale and capacity to deliver sustainable and best-in-class financial services within the Nigerian market.

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    We are confident that this decade will be bullish for Nigeria’s tech space and are ready to work with the fintech community in strengthening the solutions necessary to meet consumer needs.”

    READ: Which of these contender groups will produce Nigeria’s biggest bank?

    What you should know

    DLM Capital Group prides itself as a foremost developmental investment bank in Africa and functions as a sole arranger to more than 80% of structured finance transactions in Nigeria, with 100% of all securitization transactions in the market currently.

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