CBN forex scheme lifts external reserves to $39b
External reserves leapt 1.61 per cent ($620 million) to $39.22 billion in June from $38.6 billion in May, thanks to RT200 FX Programme of the Central Bank of Nigeria (CBN).
External reserves had been on a downtrend since the beginning of the year, losing a total $2.04 billion between January and May but rebounded in June.
The growth leveraged on CBN policy geared towards improving foreign inflows into the economy through greater export earnings and diaspora remittances.
The CBN launched in February the RT200 FX Programme which aims to attract $200 billion in foreign exchange (forex) repatriation from non-oil exports over the next 3-5 years.
The CBN had in March 2021 introduced the “Naira 4 Dollar Scheme” for diaspora remittances, which offers recipients of diaspora remittances through International Money Transfer Operators (IMTOs) approved by the CBN to be paid N5 for every $1 received.
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Impact of external shocks on economy
CBN Monetary Policy Committee (MPC) welcomed its efforts towards ensuring exchange rate stability, noting the current difficulties in managing the stream of external shocks impacting the economy, as reported by Nairametrics.
“The Committee also applauded the performance of the RT200 and similar initiatives targeted at improving accretion to reserves and stabilising the exchange rate.”
“The MPC noted that foreign exchange inflow through the RT200 FX Programme in Q1 and Q2, 2022 had increased substantially to approximately US$600 million as of June 2022.”
“Members also noted the increase in Diaspora remittances as a result of the Naira for Dollar incentive and urged the Bank not to relent in its efforts to encourage foreign exchange inflow to the economy.”
The $600 million increase in external reserves is a good development but it is far adrift the $200 billion target the CBN set over five years assuming $40 billion per year.
However, the increase in non-oil exports will help boost external reserves and increase the war chest with which the CBN defends naira.