Shoring up Nigeria’s FX reserves
Nigeria’s foreign exchange reserves dropped by 10.2 per cent to $33.3 billion between January and October this year. What options are available to the Central Bank of Nigeria as it aims to shore up the country’s FX liquidity? Rhode Luemba, Head of Flow sales, Global Markets at Standard Bank Group joins CNBC Africa for more.
Tue, 31 Oct 2023 14:09:06 GMT
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AI Generated Summary
- The decline in Nigeria's foreign exchange reserves to $33.3 billion highlights the urgent need for interventions to shore up FX liquidity.
- The government is exploring options such as injecting $10 billion into the market, with a focus on clearing backlogs and stabilizing the Naira.
- Clear communication, reforms, and setting exchange rate targets are vital to restoring investor confidence and navigating market forces.
Nigeria's foreign exchange reserves have experienced a significant decline of 10.2% to $33.3 billion between January and October this year. The Central Bank of Nigeria is faced with the challenge of shoring up the country's FX liquidity amidst ongoing market volatility. In a recent interview with CNBC Africa, Rhode Luemba, Head of Flow Sales, Global Markets at Standard Bank Group, shared insights on the current state of Nigeria's FX market and the options available to the government to address the liquidity issues. Luemba highlighted the need for interventions in the short term to boost investor confidence and stabilize the Naira. One of the key strategies discussed is the injection of $10 billion into the market, with $7 billion pledged by the NLNG to address the backlog and support the currency. The government's efforts to communicate clearly and implement reforms are crucial in restoring trust among foreign and domestic investors. However, challenges remain as the authorities aim to establish a target exchange rate and navigate market forces amidst speculation and volatility.
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