Foreign Reserves Slip Further to $36.7bn

• Foreign Reserves Slip Further to $36.7bn

The nation’s foreign reserves declined further in the month of February from $37.37 billion previously reported on this medium to $36.69 billion on February 20, 2020, latest data from the Central Bank of Nigeria has shown.

The reserves dropped from about $45 billion recorded in June 2019 to $40.5 billion in October before falling to $39.24 billion on December 13, 2019. In 2020, the reserves opened the year with $38.53 billion on January 2, 2020, its highest this year so far.

The reserves has declined by $1.84 billion year-to-date.

The Central Bank of Nigeria, Governor, Godwin Emefiele, attributed the situation to the country’s overdependence on crude oil for over 60 percent of fiscal revenue and over 90 percent of its foreign exchange inflows, adding that any global happenings, especially crude oil, always affect both manufacturers and investors looking to buy foreign currency for business.

He said, “Average monthly inflows of forex into the CBN fell from over $3.4bn in June 2014 to a low of $1.4bn in September 2016. The decline in forex earnings was further complicated by the foreign capital flow reversals due to rising yields in the USA. The impact on our economy was evident in the rising pressure on the naira-dollar exchange rate.

“With the drop in forex inflows, the exchange rate at the parallel market rose from about N200/$ in August 2015 to N525/$ in February 2017. Inflation also rose from 9.6 per cent in January 2016 to over 18.7 per cent in January 2017.

“Our external reserves fell from about $31bn in April 2015 to $23bn in October 2016, and activities in the industrial sector witnessed a lull as manufacturers struggled to get access to key inputs needed in the production process.”

He stated, “In the import and export window, over $60bn worth of transactions have taken place since the inception of the window in April 2017, and our foreign exchange reserves are above $40bn as at October 2019, relative to its low point of $23bn in October 2016.

“We have been able to build our reserves in the midst of lower oil prices, as strong reserves aid the confidence of domestic and external investors. Today, our current stock of external reserves is able to finance 12 months of current import commitments.”