Nigeria’s Foreign Reserves Drop to 2 Month Low

• Nigeria’s Foreign Reserves Drop to 2 Month Low

Nigeria’s foreign exchange reserves have dropped to a two-month low in February after reaching a record high in January.

The recent data published by the Central Bank of Nigeria (CBN) showed the foreign reserves dropped from the $43.174 billion recorded on January 13 to $42.86 billion on February 14.

In May 2018, the reserves rose to $47.865 billion but plunged to $41.523 billion in November despite crude oil trading above $80 a barrel.

PwC Nigeria, however, attributed the drop to CBN’s foreign exchange policy, saying the apex bank increased its forex intervention by 87 per cent to $40 billion in 2018 in order to ensure stability in the forex market and sustain economic activity.

In the report titled “Nigeria economic outlook -Top 10 themes for 2019″, the decline was also associated with the national elections and rising forex demand.

It noted that the reserves declined by 24 per cent between January 2010 and May 2011 and another 30 per cent between January 2014 and May 2015.

Experts at Cordros Capital said the reserves depleted by $88.07 million week-on-week to $42.86 billion.

“Meanwhile, total turnover at the Investors and Exporters window dipped by 38 per cent to $1.03bn. The naira appreciated slightly by 0.02 per cent to 361.65/$ in the I&E window but saw a marked depreciation of 0.28 per cent to 362/$ at the parallel market”, the analysts stated.

“At the forwards market, the USD/NGN appreciated across all contracts – the three-months (+0.11 per cent to N370.68), six-months (+0.14 per cent to N382.26), and one-year (+0.03 per cent to N412.11) – save for the one-month, which declined by 0.08 per cent to N368.24.”