Godwin Emefiele, The Central Bank of Nigeria (CBN) governor believes maintaining stable exchange rate to avoid depreciation of the Naira is better than building foreign reserve buffers.
Emefiele made it clear to newsmen on Sunday that this was part of the outcome of the Nigerian delegation’s meetings with investors and institutions at the International Monetary Fund (IMF) and World Bank Group (WBG) Annual Meetings in Bali. He said, “We are very conscious of the need to build buffers but unfortunately I must say that we are in the period where it will be difficult to talk about building reserve buffers.
“We can only build reserve buffers if we want to hold on to the reserve and then allow the currency to go, and wherever it goes is something else.
“So it is a choice we have to make and at this time the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we do not create problems in the banking system assets.”
Like other emerging markets in other nations, Emefiele believes Nigeria has also lost reserves but only marginally because it had managed to sustain stability in its foreign exchange market.
The CBN governor said that the IMF and the World Bank advised that nations should build country specific policies and fiscal and structural reforms that would boost economic growth.