By Simon Akoje
Economists have commended the Central Bank of Nigeria (CBN) for sustaining the country’s external reserves at 48.54 billion dollars amid persistent global economic shocks and pressures on emerging markets.
The experts, who spoke in separate interviews with the News Agency of Nigeria (NAN) in Lagos on Wednesday, said the steady growth in reserves reflected improving investor confidence and strengthened liquidity in the foreign exchange market.
Dr Uju Ogubunka, former Executive Secretary of the Chartered Institute of Bankers of Nigeria (CIBN), the reserve level indicates improved liquidity and stability in the foreign exchange market.
According to him, the increase is a positive signal for the economy.
“Having this value of foreign reserves indicates adequate liquidity and stability in the foreign exchange market.
“This often engenders investment confidence, while repatriation of funds by investors will not be a challenge,” Ogubunka said.
He urged the government to sustain the accretion to the reserves through investments in productive sectors and critical infrastructure.
“The government should invest more in productive sectors and address key infrastructural deficits.
“This will stimulate economic growth and help ameliorate the hardship being experienced by Nigerians,” he said.
Also, Mr Benjamin Akinsoto, Senior Researcher at BAA Consult, said the apex bank deserved commendation for maintaining strong reserve levels despite global uncertainties.
Akinsoto said that the nation’s current reserves were strong enough to cover imports for about 12 months, far above the international benchmark of three months.
“Our current reserves can cover monthly imports for about 12 months, even when the benchmark is three months.
“Although pressures from the Middle East crisis have pushed some investors to move funds to safer havens, resulting in temporary depletion, the reserves remain robust,” Akinsoto said.
He said reforms introduced by the Central Bank of Nigeria in the foreign exchange market would continue to strengthen the economy and support long-term recovery.
“The apex bank’s reforms in the foreign exchange market will lead to a rebound despite minor depletions.
“Any setback will always be temporary, considering the incentives regulators have put in place for investors,” he added.
NAN reports that Nigeria’s gross external reserves rose to 48.54 billion dollars on May 14, extending a week-long recovery that added more than 218 million dollars to the country’s foreign currency buffer.
Latest data released by the Central Bank of Nigeria showed that reserves increased steadily from 48.33 billion dollars recorded on May 7 to 48.54 billion dollars as of May 14.(NAN)(www.nannews.ng)