CBN depletes external reserves to defend struggling Naira

The Central bank of Nigeria since the start of the year has made efforts to help defend the Naira and discourage Nigerians from patronizing the black market.

The various interventions in the official market have resulted in the removal of $975.7 million from Nigeria’s foreign reserves in the last five months.

Nigeria’s external reserve has fallen below the $40 billion threshold it had maintained in over three months. This is according to data from the Central Bank of Nigeria (CBN).

The reserve had endured a continuous decline in recent months owing to the intervention of the apex bank in the official FX market and sustained forex crunch in the economy. Notably, the reserve level has fallen to $39.98 billion as of Thursday, 3rd February 2022.

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Also, CBN supplied $1.42 billion through interbank, while $2.77 billion was channeled through BDC operators between January and June 2021, before the bank discontinued the sales of FX to the operators.

Meanwhile, Naira gained slightly against the U.S. dollar at the Investors and Exporters (I&E) segment of the foreign exchange (forex) market on Thursday.

Data from FMDQ securities exchange windows showed that Naira at the official market appreciated by 0.24 per cent or N1 to N416.00/$1 compared with the previous day’s value of N417.00/$1.

However, the Nigerian currency further depreciated against the Pound Sterling at the spot market by 12 kobo on Thursday to settle at N549.78/£1 in contrast to N549.66/£1 it was transacted on Wednesday.

But the situation was different with the Naira against the Euro at the same market window as it gained 17 kobo to close at N457.46/€1 versus the previously quoted rate of N457.63/€1.