IMF Warns Nigeria About Dwindling Dollar Reserves
Nigeria’s foreign exchange reserves has been going down over the past few months.
It fell to $44.30 billion on September 28 from $45.83 billion at the end of August. The reserves dropped further to $43.52 billion on Tuesday, October 9.
However, the Central Bank of Nigeria, CBN is not worried. But some people are, including the International Monetary Fund, IMF.
The Fund has now warned Nigeria to be cautious about how it spends the dollar reserves because oil prices could decline at any time.
The Head, Emerging Economies Regional Studies Division at the IMF’s European Department, Anna Ilyina, at the ongoing Annual General Meetings of the IMF/World Bank in Bali, Indonesia, said Nigeria and other emerging market nations had come under pressure since April.
She warned that the advanced economies’ interest rate hikes were still at the early stages, adding that Nigeria should be cautious.
She said: “A combination of factors has basically affected emerging market since then. It started with sharp appreciation in dollar due to rising interest rates in US. In the case of Nigeria, there is one important driver that always affects its economic condition and that is oil.
“Foreign exchange intervention might make sense in certain circumstances. But then, one must consider the growth in fundamentals, the level of reserves and other policy tools that might be more appropriate in country-specific circumstances.”
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