Nigerian Federal Govt to convert country's foreign 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.