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HomeTop NewsJP Morgan Nigeria's FX reserves estimate 'presented out of context,'  says CBN

JP Morgan Nigeria’s FX reserves estimate ‘presented out of context,’  says CBN

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The Central Bank of Nigeria (CBN) has issued a response to JP Morgan’s recent assessment of the country’s foreign exchange (FX) reserves, asserting that the estimate was presented “out of context,” according to Hassan Mahmud, Director of the Monetary Policy Department at the CBN.

Mahmud offered these insights during an appearance on the program “Moneyline with Nancy” on Africa Independent Television (AIT) on Wednesday.

In the recent report, JP Morgan projected that the CBN’s net FX reserves would have declined to $3.7 billion by the close of 2022, marking a notable contrast from the $14 billion recorded in 2021.

Addressing this development, Mahmud emphasized that fluctuations, liabilities, and encumbrances impacting reserves were a natural and expected occurrence. He stated that upon internal review of JP Morgan’s figures, the CBN maintained its composure.

“That’s not the first time we are seeing people and institutions reeling out numbers; they must have their intentions to do that, whether to rouse market sentiments or to mislead the public,” Mahmud said.

“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.”

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“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.

While Mahmud acknowledged that he lacked specific details on JP Morgan’s methodology, he reiterated the CBN’s commitment to transparency in its own reporting. He pointed out that the CBN predominantly retained about 80 percent of funds in reserves, with the primary goals of stabilizing the local currency during periods of market volatility and bolstering 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 $33 billion; 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.”

In response to inquiries about whether the public should dismiss JP Morgan’s estimate, Mahmud underscored the CBN’s position of responsibility.

He said It would be a disservice for us, as the CBN, to engage in public discourse directly responding to JP Morgan or any individual at the institution. Our sovereign stature demands that we exercise restraint.

According to him, the focus should remain on our commitment to accuracy and fair representation, despite external interpretations.

Mahmud concluded, “I don’t want us to get to that level where we will be ridiculing ourselves as a sovereign or country because of a private investor that has its own motives for giving those numbers. It could also be that those numbers were quoted out of context.”

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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