Nigeria’s foreign reserves have reportedly dropped by $261 million in 15 days.
Data published on the Central Bank of Nigeria’s (CBN’s) website shows that Nigeria’s external reserve is now $36.3 billion as at June 18.
According to the CBN data, Nigeria’s external reserve position as at June 3 was $36.57 billion. The drop was as a result of the ever-rising demand by Nigerians for importation despite the global lockdown and the limited dollar revenue due to stiff Organisation of Petroleum Exporting Countries (OPEC) cuts and low crude oil prices.
The reserves declined for a second consecutive week since June 3, when it stood at $36.577 billion. This represents a decline of $261 million or 0.71 per cent in 15 days, compared to the $36.316 billion as of June 18, 2020.
The Naira has been under pressure against other major currencies, particularly the dollar, since the fall in oil prices and the outbreak of the COVID-19 pandemic. This has triggered a wave of currency speculators who believe the devaluation, which occurred in March, should have been more.
The CBN devalued its official exchange rate in March from N307/$1 in reaction to the fall in crude oil prices. However, Brent crude oil prices have risen since then to over $43 per barrel, but yet to hit pre-crash level prices.
Speculators are betting that the government may devalue the naira further if they are to fund the government’s huge revenue gap.
However, dollar shortages, which is impacting on the external reserves continue thus widening the exchange rate at the Investors and Exporters (I&E) window and the parallel market.
The Federal Government, through the Economic Sustainability Committee, had proposed the unification of the exchange rate to maximise Naira returns to Federation Accounts Allocation Committee (FAAC) from the foreign exchange inflows.
The policy measures by the committee are also designed to help manage the exchange rate in a sustainable manner. As part of the measure to improve the foreign exchange supply to CBN, the committee had recommended the sale of foreign exchange supply directly to the apex bank by oil firms and oil service companies instead of the Nigerian National Petroleum Corporation (NNPC).
The Naira depreciated to N386.50 to a dollar at the I&E window last week Friday. It also depreciated to N455 to a dollar at the parallel market otherwise known as the black market.
(EyeWitness/Business)