Nigeria’s foreign reserves fall to 6-weeks low

Nigeria’s foreign reserves depleted to 6 weeks low in July, declining by a whopping $81.10 million. This is reflected in the latest data released by the Central Bank of Nigeria (CBN) on its website.

According to the CBN’s data, Nigeria’s gross foreign reserves currently stand at $45.09 billion, from the estimated value of $45.17 billion on the 10th of June 2019, representing almost two months low. Within the period, total reserves inched down by $81.10 million.

Recall that the reserves had crossed the $45bn thresholds in May 2019, increasing by $212.2 million to hit the $45bn mark but suffered a decline recently. In June 2019, Nigeria’s external reserves increased by $155.6 million.

The reserves posted in June marked a 35% point increase within a period of three weeks in 2019. This is the highest figure posted so far in 2019. The recent decline means foreign reserves maintain a free fall.

Meanwhile, the reserves have fluctuated in recent weeks, and this may partly border on the movements in prices of oil, due to the sustained tension in the Middle East and the U.S/China trade war.

Recently, while delivering a lecture at the University of Benin, the CBN Governor, Godwin Emefiele, disclosed that the introduction of the Investors and Exporters’ window had helped in shoring up the country’s external reserves.

While recently reeling out the CBN’s 5-year plan, Mr. Emefiele disclosed that the apex bank was committed to stabilizing the Exchange Rate and building the country’s reserves through a coordinated policy approach.

“We will also work with our counterparts in the fiscal arm in supporting improved FDI flows to various sectors, such as agriculture, manufacturing, insurance, and infrastructure. These measures while supporting improved inflows into the country will help to stabilize our exchange rate and build our external reserves.”

One of the ways the CBN has been able to maintain Naira stability, in recent months, was by drawing from the reserves to defend the currency. The CBN builds reserve buffers and periodically uses it to intervene in the currency exchange market, to prevent the value of Naira from depreciating.

The apex bank has made clear its resolve to maintain a stable exchange rate, while building external reserves on the side.