External Reserves Drop to Three Month Low

• External Reserves Drop to Three Month Low

The Nigerian foreign exchange reserves dropped to its lowest level since April.

According to the data released by the Central Bank of Nigeria on Tuesday, the foreign reserves decreased by $251 million in the first six days of the month to $46.868 billion, down from $47.119 billion attained on July 31. The lowest in almost four months.

The data showed external reserves increased from $46.845 billion on April 11 to $46.881 billion on April 12. However, the reserves hit a record high of $47.798 billion on July 5 before declining to the current level.

A related report published by FSDH Research, in its Monthly Economic and Financial Markets Outlook on Tuesday, noted that the external reserves recorded persistent drawdown in July.

Analysts at FSDH Research attributed the drawdown to the increase in demand at the foreign exchange market as foreign investors continued to pull-back from the Nigerian market due to the growing political uncertainty and projected surge in U.S interest rates.

“The total inflow through the Investors’ and Exporters’ FX Window (I&E Window) between April 2017 and July 2018 stood at $34.29bn. Our analysis shows that the total inflow through the Investors and Exporters Window in July was the lowest figure recorded since August 2017. The two largest contributors to the inflow in July were $0.56bn from other corporates, and $0.54bn from Foreign Portfolio Investments.”

The 30-day moving average showed the external reserves decreased by 1.32 percent from the $47.79 billion at the end of June to $47.16 billion by the end of July.