Depleted Reserves Used To Settle Debts Owed International Creditors, Not To Defend Naira–Cardoso

The recent depletion of the nation’s foreign reserves was used to settle debts owed to international creditors and not to defend the naira as widely claimed.

The Central Bank governor, Olayemi Cardoso, said this at the ongoing International Monetary Fund Spring Meetings held in Washington D.C on Wednesday.

There had been concerns over the significant downturn of the country’s exchange reserves, plunging by approximately $2.16bn in 29 days, amidst robust efforts to stabilise the naira.

He said, ”I want to make this as clear as possible, it is not in our intention to defend the naira. and as much I have read in the recent few days, some opinions with respect to what is happening with our reserves and if the central bank is defending the naira.

“What we have seen with respect to the shift in our reserves is the shift that you would find in any country where for example, debts are due and certain payments need to be made and they’re done because that is also part of keeping your credibility intact.”

Data on the movement of foreign reserves obtained from the CBN website showed that as of April 15, 2024, the FX reserves was $32.29bn, which is a decline from $34.45bn recorded on March 18, 2024.

The decline marks the lowest in six years and it is a decisive end to a period of steady accrual, during which the reserves witnessed a 43-day surge, accruing $1.28bn between February 5 and March 18, 2024.

But speaking at the event, Cardoso said the depleting external reserve is due to debt repayments, other obligations, and depletion due to the ordinary course of business as seen in other countries.

He also stated that there were no intentions to defend the currency with the external reserves, as it was counterintuitive