Nigeria’s foreign reserves have risen to $40.2 billion, up from $38.4 billion in the previous month, said Central Bank of Nigeria Governor Olayemi Cardoso speaking at an investor meeting in Washington, D.C.

Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, was also present. He noted that it has been the strategy of government to let the market determine the exchange rate of naira because currency defense is no longer a practice by government as it was then. This organic growth of the country’s gross reserves was made possible, he explained, through the market-driven approach.

Edun vowed to let investors know that the government was committed to an open manner of reserve management, especially regarding net reserves. He promised that the reserve position would be shared regularly, saying “we are very committed to sharing that number very shortly” and indicated aggregated reserve numbers would be available by year-end.

The minister said former mechanisms that protected the naira cost the government around $1 billion a month, which is hardly sustainable. He said the relief to the central bank in its defensive role will create a stable environment that will be confident enough for investors. Edun said, “We are allowing the market as much as possible to set the level for the naira, and we’re building buffers to enhance that confidence.”

He goes further by pushing for improvement in organic supply of foreign exchange so as to reduce interference with the operations of the CBN in the currency market. There must be some instances of intervention that are inevitable, yet the aim should be towards an exchange rate stable without being dependent on the central bank’s actions and decisions.

Edun also highlighted the increasing relevance of FPI in Nigeria’s economy, since the confidence of investors in Nigeria improved and overseas investors became more willing to invest their resources in Nigeria. He noted that recent OMOs implemented after the MPC meetings received positive responses so far; hence, rededicating itself to the strengthening effort of the government for the financial environment.

Generally, the recent surge in foreign reserves is a strategic shift in the economic policy of Nigeria since it is giving greater prominence to the market dynamics and investor confidence than was the earlier phase of interventionistic strategies.