Chidi Samuel|
Godwin Emefiele, governor of the Central Bank of Nigeria, The administration of President Muhammadu Buhari chose to save the naira instead of building reserves, Nigeria’s central bank governor, Godwin Emefiele has said.
Anna Ilyina, IMF’s head of emerging economies regional studies division, had last week at the World Bank Summit in Indonesia, urged Nigeria to use her foreign reserves judiciously and build more buffers, given that there will be further interest hikes in the US which would lead to increased capital outflows in Nigeria and other emerging economies.
But in an interview with newsmen on Sunday, Emefiele, said it is difficult to talk about building reserves at the moment.
“We are going to need to build buffers but unfortunately I must say that we are in a period where it is difficult to talk about building reserves,” he said at a press conference to mark the end of 2018 annual meetings of the World Bank Group and International Monetary Fund.
“You can only build reserve buffers if you want to hold on to the reserves while allowing your currency to go and wherever it goes is something else.
“It is a choice we have to make and at this time, the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we don’t create problems in the banking system.
“Naturally, when this happens, it results in weakening of assets, rising non-performing loans and other wide implications. This is why we will maintain the posture we have and we believe that it is sustainable in the short run.”
Nigeria’s foreign reserves currently stand above $43.3 billion.