Cardoso says CBN is not using foreign reserves to defend naira

Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), says the country is not using its foreign reserves to defend the naira.

Cardoso disclosed this on Wednesday, April 17, 2024, while speaking at the International Monetary Fund-World Bank Spring Meetings in Washington DC.

The CBN boss said $600m came into Nigeria’s reserves account within the last two days.

Cardoso said this in reaction to the claims on social media that the recent appreciation of Nigeria’s naira against the dollar is because the apex bank uses foreign reserves to defend the nation’s currency.

In recent weeks, the naira has appreciated against the dollar, gaining over 40%, from about ₦1,900/$ to about ₦1,000/$1.

However, while the naira appreciates, Nigeria’s foreign reserves dwindle, dropping to about $32.29 billion on April 15 — the lowest level in over six years.

The drop in foreign reserves strengthened the narrative that the CBN Governor is burning through the reserves to strengthen the naira.

Clarifying this on Wednesday, Cardoso said the shift in the foreign reserves has nothing to do with naira appreciation.

He said, “What you’ve seen with respect to the shift in our reserves is normal in any country’s reserves where for example, debt are due and certain payment needs to be made, they are made because that is also part of keeping your credibility.

“Other times money comes in, takes it up again, between yesterday and today, about $600m that came into the reserves account. We are looking towards a market that operates by itself, willing buyers, willing sellers, and price discovery.

“The shift in our reserves has little or nothing to do with defending the naira and that is certainly not our objective.”