The Central Bank of Nigeria (CBN) has taken issue with JP Morgan’s recent valuation of Nigeria’s foreign reserves. JP Morgan claimed a drop from $14 billion in 2021 to $3.7 billion by 2022’s end. Hassan Mahmud, CBN’s Director of Monetary Policy Department, addressed these allegations on Money Line Africa Independent Television. Here are the main takeaways:
1.Misinterpretation Concerns: Mahmud suggested that JP Morgan’s figures might lack proper context. He emphasized that foreign reserves naturally undergo regular fluctuations.
2.Routine Changes: Mahmud highlighted that it’s typical for reserves to vary due to various influences, including liabilities.
3.Motives in Question: Mahmud expressed reservations about why certain institutions might release specific numbers, pondering if it’s to sway market moods or potentially misguide the populace.
4.⁸Nature of Reserves: Foreign reserves are fluid, Mahmud explained, noting they change frequently. He also mentioned it’s not customary to mark to market daily outstanding liabilities to ascertain net balance.
5.CBN’s Perspective While not outright dismissing JP Morgan’s data, Mahmud conveyed it’s not befitting for CBN officials to publicize reactions to every external statement.
6.Reserve Status: The CBN holds approximately 80% of the reserve funds, primarily to back the local currency during unstable times and to boost foreign investor trust. According to Mahmud, the reserves are currently at $33 billion, encompassing different facilities and funds.
In essence, the CBN feels that JP Morgan’s assessment doesn’t wholly represent the actual situation of Nigeria’s foreign reserves. They emphasize understanding the reserves’ inherent volatility and encourage discernment when interpreting numbers from private entities.