Nigeria’s foreign reserves declines as Naira plunges further against US dollar

Nigeria’s foreign reserve has declined rather than being boosted by higher crude prices, figures published by the Central Bank of Nigeria show.

The foreign reserve opened the year on 4 January with $35.6 billion, but as at 1 March, the reserve was down to $34.996 billion. The highest level it reached was in the $36 billion range from January up till 5 February. On 8 February, it fell to $35,927,981,941.

It has not recovered to the January-early February level, even as oil prices increased from $54.66 per barrel on 6 January to $66, quoted by CBN on Wednesday.

The plunge is graphically shown better by the CBN as it showed a deep dive from $36.5 billion to $34.996 billion. The poor flow of dollars into the reserve affects the nation’s exchange rate with other currencies.

The Nigerian Naira has been under pressure for months, with the CBN announcing an official devaluation from N379 to N410. This however, has not been reflected on the CBN website, as banks offer the dollar at N415 at GTBank and N450 at Access Bank.

The exchange rate between the naira and the United States Dollar closed at N411.63/$1 at the Investors and Exporters window on Wednesday, March 3, representing a 0.59 per cent drop or N2.33 when compared to N409.2 recorded on Monday.

However, on the unofficial market, data posted on abokiFX.com, a website that collates parallel market rates in Lagos showed the domestic currency strengthened by N2.00 or 0.42 percent to the dollars on Wednesday to close at N480/$1 on from the N482/$1 that it closed on the previous trading day.

Forex turnover at the Investor and Exporters (I&E) window also rose by 142.7 percent on Wednesday, March 3, 2021.

According to the data from FMDQ, forex turnover increased from $24.38 million recorded on Monday, March 1, 2021, to $59.17 million on Tuesday, March 2, 2021.