According to the Central Bank of Nigeria, JP Morgan’s most recent estimate of the nation’s foreign exchange reserves was “out of context” and thus incorrect.
JP Morgan predicted earlier this week that the CBN’s net foreign exchange reserves will decrease from $14 billion in 2021 to $3.7 billion at the end of 2022.
Director of the CBN’s Monetary Policy Department Hassan Mahmud, who spoke on Money Line Africa Independent Television on Wednesday, clarified the accurate assessment of Nigeria’s reserves by stating that changes in the reserves’ value as well as obligations and other encumbrances were only natural and expected.
We also read the JP Morgan data internally, and we weren’t alarmed by them, he said. It’s not the first time we’ve noticed individuals and organisations reciting statistics; they must have their intentions to do that, whether to rouse market sentiments, whether to mislead the public,” Mahmud said.
“However, the central bank has made every effort to be open. The only thing I will say about those figures is that they are amusing in that number one, reserves, like any account balance, is a flow with changes occurring at any given time.
Two, even if you have unpaid obligations, you shouldn’t declare that day’s total to be your net balance without first marking the unpaid liabilities to market.
When questioned about whether the public should dismiss the JP Morgan estimate, Mahmud responded, “It is a mockery for us (the CBN) to come to the public realm, whether the CBN governor or deputy governor to talk on problems by JP Morgan. In JP Morgan, I’m not even sure who said it.
“I don’t want us to reach the point when we will be made fun of as a sovereign or nation because of a private investment who provided those data for its own purposes. Another possibility is that the figures were taken out of context.
Mahmud said that the CBN controlled around 80% of the cash in reserves, mostly to sustain the local currency during times of instability and to increase international investors’ trust.
“The numbers are there. The reserves of the central bank are on our bank network. Yes, the number you see today might not be accurate to the very last decimal point, but you still have that picture, the CBN official stated.
“We have $33bn, there is an IMF facility there, the SDR is also there, we have the JP Morgan numbers that you mentioned, we have forwards, they are all there.”