Nigeria’s External Reserves Records Sharp Drop To $33.39 Billion
Nigeria’s external reserves has recorded a sharp drop to $33.39 billion in the first week of this month, according to data from the website of the Central Bank of Nigeria (CBN).
This represents a drop of over $500 million against $33.95 billion in the reserves at the end of last month.
CBN in its ongoing drive to boost fund in the external reserves, has announced moves to begin immediate release of more foreign exchange to banks to settle the outstanding request of their customers foreign exchange
The initiative is part of moves to attract more foreign exchange into the depleted external reserves.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said the external reserves are used to support the naira and fund imports.
He said the foreign exchange reserves have been declining as a result of pressure to defend the naira through the CBN’s interventions. He noted that the decline has to do with the level of inflows and outflows and the impact of low oil production and oil theft.
“We are hoping that with the ongoing reforms, it will get better, Yusuf told BusinessDay by phone.
Festus Adenikinju, a member of the Monetary Policy Committee said in his March 2023 personal statement that the decline in gross external reserves was driven by the rise in debt service payments and foreign exchange (FX) swap transactions.
He said the FGN’s net fiscal operations resulted in an expansionary fiscal deficit in February 2023 (m-o-m). The overall deficit rose by -N539.01 billion in February 2023 compared to – N417.75 in January 2023. Both government expenditure and revenue declined. FGN Debt increased owing to new borrowings to finance the deficit in the 2022 budget and new loans by subnational governments.
The Nigerian foreign exchange market continues to face challenges with the naira’s depreciation against the greenback even as the oil market continues to show buoyancy with prices rising on global supply concerns, analysts at Cowry Asset Management Limited said.