FG To Convert Federal Reserves To Chinese Currency

The Federal Government has concluded
arrangement to convert the nation’s
reserves into Renminbi (RMB),the Republic
of China’s currency. The Director General of
Nigeria Sovereign Investment Authority
(NSIA), Mr Uche Orji, who confirmed this
while fielding questions from newsmen in
Abuja, said, although it is clear that the
Federal Government has concluded plans to
convert part of the reserves to Renminbi,
what is not clear yet is the size of the
reserves that would be transferred.
Nigeria’s reserves as well as most
countries’ are in the US Dollar, but with the
increasing rate at which the Renminbi is
growing, most economies are seriously
considering tranferring part of their
reserves into Renminbi. This is to ensure
that they do not put their eggs in one
basket if the dollar crashes.
Also fielding questions from newsmen,
Deputy Governor, Operations, Mr Tunde
Lemo, has confirmed the transferring of
Nigeria’s reserves, saying that it has been
on the front burner of CBN.
Meanwhile, the external reserves, which
dropped to $46 billion a month ago, may
have fallen again to $45.9 billion. Data
posted on the Central Bank of Nigeria
website showed that shortly after falling to
the $46 billion mark on August 21, the
reserves have been on a gradual fall from $
46.9 billion on August 20 to $46billion on
September 19.
The CBN’s latest data showed that the
reserves dropped to $46.97 billion on
August 21, after rising to the $47 billion
mark since August 7.
The foreign reserves had also dropped by $
1.8 billion within the space of three
months, from the peak of $48.85 billion on
May 2 to $46.98 billion on August 5.
According to the Central Bank of Nigeria
(CBN) Governor, Mallam Sanusi Lamido
Sanusi, the move to invest the reserves in
other currencies , other than the dollar, is
necessary in view of recent events in the
global economy that have driven yields to
historical low levels.
“A major concern among central banks in
recent times is how to generate income
from foreign exchange reserves without
compromising the reserves management
objectives of safety and liquidity.
“Liquidity and safety are far more important
and they come before returns
management”, he said.
The central bank chief said since the
financial crisis of 2008, reserves managers
had come under increased pressure to find
ways of enhancing income.
This development, he noted, had made the
CBN to diversify its reserves portfolios by
investing in the Chinese Renminbi.
The Federal Government had targeted $50
billion reserves by the end of 2012.
The reserves, however, closed the year at $
44.26 billion on December 24, 2012,
finishing $6 billion below the government’s
target.
http://sunnewsonline.com/new/specials/
businessweek/fg-convert-reserves-chinese-
currency-soon/

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