Business: JP Morgan estimates that Nigeria’s reserve is $3.7 billion rather than $33.8 billion
JP Morgan, a leading global provider of financial services, pegs Nigeria’s net foreign reserve at about $3.7 billion.
The amount is far less than the $33.8 billion listed as of August 17 on the website of the Central Bank of Nigeria (CBN).
The $14 billion net number revealed at the end of 2021 is substantially lower than JP Morgan’s expectation.
This information was provided by the bank in its most recent report on Nigeria, “Nigeria: Reform pause rather than fatigue.”
It was suggested that bigger currency swaps and borrowings against the forex reserve were the cause of the lower-than-reported forex reserve.
According to the global financial institution, the CBN’s net foreign exchange reserves were approximately $3.7 billion at the end of the previous year, down from $14 billion at the end of 2021, based on information from the audited financial records that was only partially complete.
The bank claims that the assumptions were based on the addition of $5 billion in Special Drawing Rights (SDR) from the International Monetary Fund to external reserves, resulting in total gross foreign exchange reserves of US$37.8 billion.
It claimed that this was roughly in line with the 30-day moving average of US$37.08 billion that was previously posted on the website of the central bank.
The bank claimed that the CBN is still able to withstand the pressure brought on by the low currency reserve, particularly as the CBN and commercial banks will continue to profit from swap agreements as interest rates rise.
