Nigeria’s external reserves suffered a major drop during the week as CBN data reveals the country’s external reserve position was $46.8 billion as at August 6th, 2018.
Nigeria’s external reserves rose to a year high $47.8 billion on the 25th of June 2018 and have failed to hit the $48 billion mark since then.
External reserves hovered just above $47 billion in the whole of July but reduced nearly every week for the month. In fact, since May, Nigeria’s external position has fallen closer to the $47 billion mark.
The exchange rate is the single most important metric for measuring how well the economy is fairing. The CBN understands this clearly and has long deployed a strategy of defending the currency whenever the opportunity arises.
The CBN has in the last few weeks sold dollars in the interbank market as liquidity squeeze threatened rates at the Investor and Exporter window.
The Nigerian Stock market has also recorded a string of losses in the last quarter with low foreign investor participation seen as one of the reasons why.
Nigeria’s vile political climate is also a possible risk that could be a deterrent to future foreign investor inflow in the market.
There is also the small factor of the summer holidays, which is when a lot of Nigerians travel abroad with their families for holiday.
Currently, there are no immediate concerns that the naira will depreciate. The one elephant in the room continues to be the Militants. So long as they remain quiet, we can rest assured that the economy will stay resilient, analysts posited.