Nigeria’s external reserves declined by US$388.74 million in the first nine days of March 2021, according to the latest data from the Central Bank of Nigeria (CBN).
The external reserves which stood at US$35.099 billion as of February 26, 2021 dipped by US$388.74 million to US$34.711 billion on March 9, 2021.
This means the reserves has depleted by US$1.430 billion since January 11, 2021 when it stood at US$36.141 billion.
The Federal Government has been struggling with weak revenue generation since COVID-19 disrupted economic activities and plunge revenue generation. However, low crude oil production despite oil trading at over $60 per barrel added to the nation’s woes.
During the Monetary Policy Meeting held in January, Godwin Emefiele, the Central Bank Governor, said, “On the external reserves position, the committee noted the increase in the level of external reserves, which stood at $36.23bn as of 21st January 2021 compared with $34.94bn at the end of November 2020.
“This reflected improvements in crude oil prices, partial global economic recovery amid optimism over the discovery and distributions of COVID-19 vaccines by most developed economies.”
That was when crude oil was trading at around $54 per barrel, against $68.82 per barrel it was sold today March 11, 2021. Suggesting that despite rising crude oil prices weak fiscal buffer amid high debt servicing continues to hurt Nigeria’s foreign reserves.
Also, the fact that the central bank refused to allow market price reflective exchange rates and continue to back Naira with the nation’s reserves contributed to the plunge in external reserves.