JP Morgan claimed Nigeria’s net foreign exchange (FX) reserves fell to $3.7billion as of 2022, contrary to $36.61billion the Central Bank of Nigeria posted on August 17 on its website.
The Central Bank of Nigeria (CBN) has rejected the recent estimate of the country’s foreign exchange (FX) reserves by JP Morgan, a financial firm.
This was stated by Hassan Mahmud, director of monetary policy department, CBN, when he featured on the Africa Independent Television (AIT), on Wednesday.
According to Hassan, JP Morgan’s estimate was presented “out of context” and therefore misleading.
SaharaReporters reported on Tuesday that JP Morgan claimed Nigeria’s net foreign exchange (FX) reserves fell to $3.7billion as of 2022, contrary to $36.61billion the Central Bank of Nigeria posted on August 17 on its website.
This was contained in the bank's latest report on Nigeria titled “Nigeria: Reform pause rather than fatigue.”
Reacting to this, Mahmoud stated that volatility, obligations, and encumbrances on the reserves were all natural and usual.
“We also read the JP Morgan numbers in-house and we didn’t panic over that. That’s not the first time we are seeing people, institutions reeling out numbers; they must have their intentions to do that, whether to rouse market sentiments, whether to mislead the public,” Mahmud said.
He continued, “But, the central bank has tried as much as possible to be transparent. What I will say about those numbers is that it is just funny in the sense that number one, reserves like any account balance, is a flow; there are changes that go within it at any particular time.
“Two, even if you have outstanding liabilities, you don’t mark the outstanding liabilities to market on a day and say this is your net balance.
“I can have $20 million in my account and I am owing someone maybe $13 million that is supposed to be paid in 2027; you can’t come in 2023 and say if I remove that $13 million, your money is $7 million or you are having $7 million.
“Now, I am not having $7 million, I am having $20 million. Because before I took a facility of $13 million, I know in the next three years, I will get $17 million so I can pay you back.
“But for you to come and tell me that no, your balance is $7 million and you can’t pay back in three years; it’s just putting it out of context.
“I don’t know how they did their calculations and I don’t have any information about that, but we also saw those numbers that came out.”
Mahmud stated that the CBN held around 80% of money in reserves, primarily to maintain the local currency during periods of instability and to promote foreign investor confidence.
“We have the numbers there. The central bank’s reserves are on our bank net. Yes, the figure you see today may not be exactly to the last decimal point but you have that picture that you are seeing there,” the CBN official said.
“We have $33bn, there is IMF facility there, the SDR is also there, we have the JP Morgan numbers that you mentioned, we have forwards, they are all there.”