The nation’s FX reserve had faced challenges, in the wake of the fall in oil prices in June 2014, and was at $34.3bn as of November 3, 2017.
The apex bank also revealed that the country had made savings of about $600 million as a result of the reduction of rice imported from Thailand alone.
The CBN governor, Godwin Emefiele stated these on Friday at the Chartered Institute of Bankers of Nigeria Annual Bankers Dinner in Lagos in a speech tagged ‘Policy Options for Sustaining Nigeria’s Economic Upturn.’
He said: “Foreign exchange (FX) reserves will continue to grow. Over the last 12 months, Nigeria’s FX reserves grew by over $10 billion from just over $23 billion in October 2016 to over $33 billion in October 2017. It is my belief that if we remain resolute with our efforts, policies and actions, we can attain an FX reserve position of about $40 billion by the end of 2018.
“As we entrench and sustain the transparency in the FX market, as FX reserves accretion continues, and market confidence and improved sentiments remain, I expect that the exchange rate will not only be stable but would begin to appreciate against major currencies. The adverse competitiveness outcome which such appreciation may entail would be adequately mitigated by proactive policies to ensure that our balance of payments position is not undermined”.
Speaking on how the country was able to make savings from the amount of rice imported, the apex bank boss revealed, that “The accretion in reserves does not only reflect increased inflow but also our shrewd FX demand management strategy. When we introduced a policy restricting 41 items from our FX markets, we were called all manner of names.
“Today ladies and gentlemen, among the benefit of that policy is the considerable decline in our import bills. From an average of about $5.5 billion, our monthly import bill has fallen consistently to US$2.1 billion in 2016 and $1.9 billion by half year 2017.
“We have also seen a sharp drop in imports of rice from several countries. To give one example, data from the Thailand’s Rice Exporters Association indicate that in 2012, about 1.2 million Metric Tonnes of rice was exported to Nigeria. However, in 2016, which was the first full year of implementation of our policy, rice exports to Nigeria had fallen by 99 percent to only 784 Metric Tonnes. This significant reduction in imports of rice from Thailand represents a saving of over $600 million to Nigeria in 2016 alone.”
He predicted the consolidation of the economic recovery experienced this year, saying: “As the sentiments improve in the macroeconomy and supported by proactive monetary, trade, industrial and fiscal policies, I expect a continued uptick in Gross Domestic Product (GDP) growth with a positive spill over to improved unemployment rate. As policies to strengthen the agricultural and industrial sectors become more emergent, growth in these sectors will rise, further bolstering overall economy”.
Emefiele also suggested that a change in monetary policy is likely likely in 2018 from the current tight policy stance to an expansionary stance.
He said: “Monetary policy stance could change when the underlying fundamentals become supportive. If the pace of disinflation becomes adequate and we see inflation at predicted levels, I am very optimistic that MPC may begin to see strong justification for an easing of monetary policy, which may further accelerate the recovery process.”