CBN’s FX policy was challenging. Kenya’s FX reserves surge
The Central Bank of Nigeria (CBN) has a strict foreign exchange policy. According to experts, it proved to be the most challenging regime for businesses last year. Dr. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprises, CPPE, spoke about that on Friday, pointing out that the central bank’s FX regime seriously affected Nigera’s economy during 2022.
Muda thinks that such a system was one of the main reasons why the country’s economy could not perform last year. He also stated that even though World Bank, economists, and citizens advised or asked the Central Bank of Nigeria to tweak its FX policy, the CBN didn’t yield. As a result, the economy suffered.
According to Muda, only those who move with currency from one place to another managed to benefit from this policy. Meanwhile, other citizens had to endure it. Nigeria faced many problems last year, including foreign exchange depreciation, transportation cost, and energy cost. Foreign exchange markets, insecurity, and external factors also contributed to the country’s struggles.
Kenya’s FX reserves rallied to $7.5bln thanks to IMF funding
The Kenyan Wall Street newspaper reported recently that the country’s forex reserves surged forward to 925.6 billion shillings ($7.537 billion) in 2022. The International Monetary Fund disbursed 81.7 billion shillings, causing the rally. However, the Central Bank of Kenya announced that the reserves would only cover the country’s import needs for 4.22 months.
Still, the International Monetary Fund’s disbursement pushed Kenya’s forex reserves above the required statutory import cushion of approximately four months in more than a month for the first time. According to analysts, that will support the country’s external position. Lower inflows of foreign financing weighed on the latter.
The IMF recently announced that growth would likely converge to about 5.5%, while inflation would probably stay around 5% over the medium term.