Nigeria may stabilise the value of naira soon, once its external reserves increase further from its $41.78billion recorded in October, this year, the Chief Executive Officer, Adedipe and Associates Consulting firm, Dr Biodun Adedipe, has said.
The country gained $5.05 billion in October, a development, which moved its foreign reserves to $41.78billion in October, from $36.78 billion in September.
In an interview with New Telegraph recently, Adedipe said the upward movement in the foreign reserves or assets held by a country goes a long way in determining the value of the currency of the country.
According to him, the increase in the country’s reserves to $41.78 billion is a good one, capable of strengthening the value of naira, which has plummeted greatly in recent times.
He prayed that Nigeria would continue to increase its foreign reserves, in order to buoy the value of its currency at the international market.
This happens, as the Deputy Governor, Financial System Stability and Directorate, Mrs Aisha Ahmed, applauded the efforts of the Federal Government in encouraging the growth of its foreign reserves in the last two or three months.
She spoke after a stakeholders’ form in Abuja recently.
Continuing further, Adedipe said the rise in Nigeria’s external reserves to $41.78 billion in October was a good omen for the country, adding that the country would be better for it, once the external reserves continue to rise further.
According to him, the value of naira may stabilise soon, once Nigeria can keep sustaining its exports for six months.
He said: “The threshold given to country to keep its exports is usually six months. The most important question a country can asked itself is: How many months can we survive, if we sell everything we have to the world? Once a country or government can provide good answer to the question, the better for it.
“However, once Nigeria can guarantee or sustain its exports over a threshold of six months, the better for the country, in the sense that its level of currency would begin to appreciate well.”
While drawing a line between the country’s external reservers and budgets, Adedipe said that the two were not the same thing.
External reserves, Adedipe said, were not directly used to determine the budgets of a country, stressing that budgets are more of fiscal operation of a country.
Recall that over N500 was at a point time exchanged for $1 before it gained more value and rose to N414.73 in the market.
Also, Nigeria’s foreign reserves, like any others, have been fluctuating for some time, due to changes in the levels of imports, which the country is carrying out.
At a point, the country’s reserves went as low as $28billion and thereafter appreciated to $32billion and later $34 billion until it was increased to $36 billion and now $41 billion in October.
Regarding budgets, Nigeria has for years been using crude oil price as a benchmark for budgets’ preparation.
By so doing, the Federal Government has been able to arrive at a very concise fiscal programmes for its annual budgets.
In 2021, the Federal Government allocated funds for key components including Power, Housing, Education in the budget.