Reserves Management
The CBK Act requires the Bank to maintain adequate official foreign exchange reserves equivalent to the value of four months imports and manage them prudently.
The reserves are used for:
• Servicing government external debt and non-debt government external obligations.
• Intervention when deemed necessary to smoothen erratic movements of the exchange rates and CBK external payments.
• Acts as a cushion against external crises.
The size of official reserves serves as a confidence signal to potential investors, rating agencies and those contemplating capital flight.
To ensure prudence in the management of reserves, the objectives of CBK reserves management policy are: Safety, Liquidity and Maximisation of Total Returns.
The primary objective in the management of these reserves is capital preservation. With respect to income, the Department invests the reserves to earn reasonable returns while maintaining adequate liquidity.