Nigeria’s foreign exchange reserves has risen sharply to $31.89 billion from its previous balance of $29.1 billion, the Governor of the central bank of the oil-rich West African state told the leadership of the Senate on Wednesday.
Governor Godwin Emefiele, said the external reserves, which had been on a downward spiral in the past months due to the sharp fall in oil prices and speculative demand of foreign exchange by currency dealers, has started a “gradual recovery.” He attributed the turnaround to the plugging of leakages in the system by President Muhammadu Buhari as well as the vigilant demand management of foreign exchange by the central bank.
The external reserves had declined from US$37.3 billion in June 2014 to US$29.1 billion as at the end of June 2015, Emefiele said in Abuja during the briefing of the Senate President and the leadership of the Senate on the Nigerian Economy.
“I am delighted to note that with the strong efforts of His Excellency, President Muhammadu Buhari, GCFR, to plug all leakages, as well as the vigilant demand management of the Central Bank, we have seen our foreign exchange reserves begin a gradual recovery. As of 7th July 2015, the reserves stood at US$31.89 billion, a trend we find very gratifying,” he added.
Speaking further on the Nigerian economy, the central bank governor also spoke about monetary policy measures deployed to stabilize the local naira against the US dollar. He also canvassed support against the continued importation of rice and the waivers enjoyed by importers, saying there is enough rice locally to feed the population.
The full text of Emefiele’s address is reproduced below:
“Your Excellencies, the President of the Senate, Deputy Senate President, the Leadership of the Senate, Distinguished Senators, the Senate Press Corp, Ladies and Gentleman, it is indeed my pleasure to be here today at the invitation of the Senate President, to share with you our understandings and view on recent economic developments in Nigeria. Although I will provide a much more detailed overview of these developments hereafter, permit me in these opening remarks to highlight the most critical occurrences and issues about our economy, as well as some context as to actions we have taken to strengthen the weak points of our economy. This is with a view to repositioning our country for the next phase of growth and development for which we greatly yearn at this time.
Since Nigeria does not exist in isolation, let me begin by drawing your attention to the rest of the world. As you may all now be aware, the global economy has experienced three major shocks in the last one year. These developments include: a) The significant and seemingly permanent fall in the price of crude oil, Nigeria’s main revenue earner; b) The end of the Quantitative Easing Programme of the Federal Reserve Bank of the United States; and c) The continued US-led sanctions on Russia for its alleged role in the ongoing crisis in Ukraine.
“In view of these developments, global growth was sluggish at 3.3 percent in 2014, with only the UK and the US showing significant signs of a pick-up even in 2015. Despite these shocks, Nigeria’s GDP increased by 6.2 percent in 3 2014. However, it slowed to 3.9 percent in the first quarter of 2015, down from 5.9 percent in the last quarter of 2014.
“Headline inflation remained stable throughout the year, although it has crept up to the upper limit of the Bank’s range of 6—9 percent. Driven largely by import prices, inflation rose gradually from 8.0 percent in December 2014 to 9.0 percent in May 2015.
“Reflecting the sharp fall in oil prices and speculative foreign exchange activities, external reserves declined from US$37.3 billion in June 2014 to US$29.1 billion as at the end of June 2015. I am delighted to note that with the strong efforts of His Excellency, President Muhammadu Buhari, GCFR, to plug all leakages, as well as the vigilant demand management of the Central Bank, we have seen our foreign exchange reserves begin a gradual recovery. As of 7th July 2015, the reserves stood at US$31.89 billion, a trend we find very gratifying.
“Given our understanding that the fall in oil prices may not be transitory but permanent, and that some speculative activities were going on in the FX Market, the CBN took a number of proactive countervailing actions. These include:
Culled from Thewilling
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