In November 2017, the Governor of the Central Bank of Nigeria at a speech he delivered during dinner of the Chartered Institute of Bankers’ of Nigeria, predicted that the Nation’s external reserves will hit $40bn by January 2018. The Acting Director of Corporate Communications for the Apex Bank reports that on Friday the 5th January 2018, the external reserves did infact hit $40.4bn, which represents a $1bn increase in the value of the external reserves within one month. In a statement explaining the reasons for the steady and consistent rise in the value of the reserves (which is a fiscal buffer established to stabilise the foreign exchange rate between the naira and other major currencies), he says the decision of the Central Bank to restrict access to foreign exchange on 41 imported items has seen a drop of 70% from $5bn to $1.5bn monthly in the amount of currency needed to import these items. He further says that the determination of the apex bank and cooperation of fiscal authorities will lead to further rise in the external reserves.
The Central Bank on Monday in an effort to supply the liquidity wholesale, small and medium scale enterprises need, injected $210m into the Interbank markets. A breakdown of the figures shows that the apex bank supplied $100m to the wholesale interbank market, gave $55m to the invisibles market and another $55m to the small and medium scale enterprises market. The Central Bank has for nearly 12months being pursuing a strategy of exchange rate confluence in the currency markets; An alignment between the official window and the parallel markets. The Central Bank believes that by maintaining ample liquidity, it will edge towards a confluence which will boost the amount of foreign direct investment into the Nigerian economy.
It would be recalled that in November of 2016, the official market dropped to its lowest level yet at 375 to the dollar on the official window and 510 to the dollar on the parallel market window. The Central responded by raising the monetary policy rate to 14% to catch up with an inflation level that was at 18%, it also took an unpopular decision to switch from a fixed exchange rate regime of +-3 naira daily band to a floating exchange rate regime with a room for Central Bank intervention in the event of major market moves. That decision saw the naira gain significantly bringing it back to the current levels of 360-365 for the parallel markets and 306-307 for the official markets, a level it has maintained since January 2017.