The Central Bank of Nigeria (CBN) yesterday revealed that Nigeria’s Foreign Reserves increased to $43.28 billion in December from $41.99 million in November of 2018.
Foreign Reserves in Nigeria averaged $1,1450.90 million from 1960 until 2018, reaching an all time high of $62,081.86 million in September of 2008 and a record low of $63.22 million in June of 1968.
Briefing the press after the first Monetary Policy Committee (MPC) meeting for 2019, Governor of the apex bank, Godwin Emefiele said the committee again left lending rate for banks unchanged 14 per cent in its efforts to rein in inflation and stabilise the financial system.
The MPR, the rate the CBN lends to commercial banks, has remained unchanged at 14 per cent for 30 consecutive months or 15 meetings of the MPC, since July 2016. It moved from 12 per cent in June 2016.
Reacting to questions on whether to float the naira, he said that floating the Naira is too risky for the Nigerian economy. The apex bank Monetary Policy Committee has left the benchmark interest rate at 14 per cent, following the first meeting of the Committee this year. CBN Governor Godwin Emefiele while answering reporters questions apparently in response to Atiku Abubakar assertion that he would float the Naira if elected President said that allowing the Naira to float would cause a currency crisis.
Emefiele said “On the issue of free float, the monetary policy committee has said it is wrong – it will certainly lead to capital flight. “It will lead to massive, massive depreciation of the valuation of our currency, and ultimately to currency crisis in Nigeria”. Answering a question about an unnamed presidential candidate criticising the central bank’s policies, Emefiele said: “I have always said that we are apolitical. We will remain apolitical.” The bank has kept the benchmark rate unchanged in an effort to curb inflation, support the naira and attract foreign investors into the debt market. Inflation has been rising steadily since July, increasing chances that the central bank would tighten interest rates this year. The inflation rate has been in double digits for three years and rose to a seven-month high of 11.44 percent in December.
He said the committee also resolved to retain the cash reserve ratio (CRR) at 22.5 per cent and liquidity ratio at 30 per cent, with an asymmetric corridor of +200/-500 basis points around the MPR.
The CRR is the funds kept with the CBN as a minimum deposit a commercial bank must hold as reserves, rather than lend out.
Although the economy recovered in the second quarter of 2017, after two consecutive quarters of contraction, it remains largely fragile and susceptible to the recession at about 1.81 percent growth rate in the last quarter of 2018.
Mr Emefiele warned government against the risk of rising debt level, which he noted was approaching the pre-2015 levels.