The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.
This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.
The country’s foreign reserves declined by 6.2 percent losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.
At the beginning of the month, the reserve was at $33.57 billion, then if further dipped to $32.6 billion by April 12.
This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.
It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.
The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.
The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.
Also. Last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books
Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.
He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.
“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.
Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) report showed that Nigeria’s production of crude oil fell for the second time this year in March.
Oil production was down from 1.32 million barrels per day in February to 1.23 million barrels per day in March, according to data from the most recent monthly oil market report published by
The International Monetary Fund (IMF) recently projected that Nigeria’s foreign reserves are expected to see a significant reduction, falling to $24 billion in 2024. The IMF anticipates a challenging period through 2024–25 for Nigeria’s financial account, exacerbated by an absence of new Eurobond issuances, significant repayments of existing funds and Eurobonds totalling $3.5 billion, and continued portfolio outflows
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