Central Bank of Nigeria’s combined debt of $7.5 billion from JP Morgan and Goldman Sachs is the reason the foreign exchange crisis may linger, according to an Economist, Prof. Uche Uwaleke.
For the first time since 2015, the Central Bank of Nigeria released its audited accounts for December 2022, showing that it made a profit after tax of N103.8 billion up from N75.1 billion reported a year earlier.
However, the Apex bank stated it owes Goldman Sachs $500 million and JP Morgan $7 billion in what it described as securities lending.
Prof. Uwaleke, in an interview with the News Agency of Nigeria (NAN) on Saturday, commended CBN for the publication, saying that the act has brought to the fore the true picture of the country’s external reserves being managed by the bank.
“Securities lending is the process of loaning securities to another party which effectively transfers ownership to the other party expected to provide collateral for them.
“In this instance, both JP Morgan and Goldman Sachs were said to have provided cash in return,” he said.
According to him, the current liquid external reserves of about 33 billion dollars did not reflect the true liquidity position of reserves as a significant proportion had been tied down by these contracts.
“Little wonder the CBN’s ability to intervene in the foreign exchange market has been hampered,” he stated.
He noted that the current volatility in the foreign exchange market might linger for quite some time, except the reserves witness substantial accretion from crude oil sales proceeds.
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