External reserves dropped by $1.1bn in February, according to statistics obtained from the Central Bank of Nigeria on Monday. The reserves which stood at $36.19bn as of February 1 fell to $35.09bn as of February 26.
The Central Bank Governor, Godwin Emefiele, had recently said Nigeria’s external reserves at $35bn was sufficient to finance the country’s seven months’ imports.
During the CBN/Bankers’ Committee conference on Friday, Emefiele said efforts were being made to conserve the country’s foreign exchange.
He said, “With the decline in our foreign exchange earnings and subsequent adjustments in the value of the naira vis-à-vis the US dollar, the CBN has continued to implement a demand management framework, which is designed to support improved production of items that can be produced in Nigeria, and further conservation of our external reserves.
These measures have helped to prevent a significant decline in our reserves. “Our external reserves currently stand at over $35bn and is sufficient to cover more than seven months of import of goods and services, even though the international rule of thumb is for reserves to cover about three months of imports.”
At the last Monetary Policy Committee meeting, he said strong emphasis must be placed on diversifying the foreign exchange earnings, as this would help to limit the impact of low crude oil prices on the Nigerian economy.
The CBN in this regard would be deploying part of its intervention schemes towards supporting growth in the country’s non-oil exports, along with measures to improve the flow of remittances through formal channels, he said.
According to him, these measures will help to provide sustainable flows of foreign exchange to meet the needs of the Nigerian economy, while supporting job creation efforts.
He also emphasised the primacy of containing inflation, as price stability was critical in guiding savings and investment decisions by households and businesses.
Due to the unprecedented situation that the country faced in 2020, and the need to limit the scars that a prolonged recovery could have on its growth prospects as a nation, he said he was inclined to support measures that would enable greater recovery of the economy.