Forex Crisis: Nigeria’s Foreign Exchange Reserves Drop by $1.8bn in Weeks

Nigeria’s foreign exchange reserves have dropped by $1.8bn in 10 weeks.

This is according to recent data from the Central Bank of Nigeria.

Accordingly, as of May 29, 2024, the country’s FX reserves stood at $32.69 billion, down from $34.44 billion as of March 18.

This decline signifies a drop from the $36.1bn recorded in May 2023.

Nigeria’s FX reserves have been declining steadily over the past few months, with a total decrease of $3.4 billion since February 2024. This is the country’s foreign exchange crisis that has remained unresolved.

Financial experts had attributed the FX reserves decline to several factors including debt repayment, a significant decline in oil exports, a decrease in foreign investment, and a rise in imports.

For instance, the country’s Debt repayment recorded by the apex bank as of January 2024 was $560m, it dropped to $283.29m in February and then $276.16m in March 2024.

The Minister of Finance, Wale Edun in a sectorial briefing to mark the Bola Ahmed Tinubu’s first anniversary, said the country’s revenue has rejuvenated as debt payment is now done without recourse to the Central Bank of Nigeria’s Ways and Means advance.

Speaking on why FX reserves dropped, CBN Governor, Olayemi Cardoso at the 295th Monetary Policy Committee meeting, attributed the situation mainly to debt repayment.

“What we have seen concerning shift in our reserves is the shift that you would find in any country where for example, debts are due and certain payments need to be made and they’re done because that is also part of keeping your credibility intact and other times money comes in and you know it takes the reserves up again and watches in the next couple of days, there will be an improvement”, he said.

Meanwhile, in May, the naira ended the month weaker, despite a surge in dollar supply amounting to $4.60 billion in the official foreign exchange market.

But the Naira recorded appreciation at the beginning of the week on Monday, closing at N1476.12 per dollar from N1485.99 traded last Friday.

(Daily Post)