CBN Mulls More savings in Yuan

There are indications that the Central Bank of Nigeria (CBN) may further increase it’s foreign savings, otherwise known as foreign reserves in Chinese currency- Yuan.
CBN Governor, Sanusi Lamido Sanusi Monday gave the hint that the apex bank may further  move additional volume of the reserves to the Yuan (RMB) from the United States Dollar as part of a strategic plan to prevent a possible  loss  of income generation arising from the instability in the value of the United States Currency in the future.
Sanusi made this known while declaring open a one-week regional course on
Optimising reserves and foreign exchange management for income generation organized by the West African Institute for Financial Economic Management (WAIFEM) in Abuja with participants from the five WAIFEM member countries of—The Gambia, Ghana, Nigeria, Sierra Leone, and Liberia. 
The course was scripted capacity for personnel in charge of the management of reserves, forex and other investment instrument on the best ways to avert risky investment so as to guarantee income generation from investments.
Sanusi was represented at the ceremony by the apex bank Deputy Governor, Operations, Tunde Lemo.
He said: “The issue about risk is changing the dynamics of the global economy. Of course you know there are issues around the currency all over the globe which is on-going whether or not the dollar will continue to be the de-facto currency for reserves savings, that is why so many countries are changing the basket of currencies where they keep their reserves so that they can meet their risks and then diversify. 
“Before now, people had thought only currencies of OECD economies were good enough but today there are emerging economy like the China, RMB. 
“The CBN two years ago took a strategic decision to diversify the reserve base by investing in RMB and it has paid off because in the last two years RMB has been appreciating, so that discussion is on going and many countries are beginning to diversify their reserve currencies in other emerging economies that are showing promises.”
He also faulted the agitations by some stakeholders to also move some of the reserves held outside the continent to Nigeria or in some institutions within the African, saying, “African Development Bank operates dollars. Many African countries have currencies that are not internationally convertible, so it may take time before we begin to see other African countries investing in other African currencies. Eonomies like China, South Korea may begin to see upsurge in investment because of the trajectory of their currencies.”
Sanusi spoke more on the import of the diversification plan in general and specifically on the course: ” The course is particularly relevant in view of the recent event in the global economy that have given yields  to historical low levels. The major concerns among the central banks in recent times is how to generate income from foreign exchange reserves without compromising the research management objectives of safety and liquidity. Liquidity and safety are important they come far before returns for reserve management.
  “The dilemma now is that whereas before the global financial crisis,  a lot of countries had depended on the returns from reserves and so many of them have actually earmarked several programmes to be financed through incomes generated from this reserves and so the dilemma now is that because yields are driven to close to zero, many of us who are familiar with the Euro, Pounds will know. You’ll be lucky to have close to two percent.
Additional reports from The Guardian

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