Nigeria’s foreign exchange reserves have fallen by $1.8bn in 10 weeks, according to data from the Central Bank of Nigeria.

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

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

The reserves have been declining steadily over the past few months, with a total decrease of $3.4bn since February 2024.

Experts believe that the decline in FX reserves is attributed to a combination of factors, including debt repayment, a significant decline in oil exports, a decrease in foreign investment, and a rise in imports.

Debt repayment recorded by the apex bank as of January 2024 was $560m, it reduced to $283.29m in February and then $276.16m in March 2024. Experts claim that the apex bank must have been servicing the foreign debts from the external reserves.

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

The FX market closed for the month on Friday with the naira losing 5.60per cent as the dollar was quoted at N1,485.99, weaker than N1,402.67 quoted at the beginning of the month, according to data from the FMDQ Securities Exchange Limited.

The foreign exchange market closed for May 2024, with the dollar selling for N1,470, weaker weaker than N1,380 quoted at the beginning of the month.

The currency’s performance this week reflects a significant struggle to maintain its value amidst fluctuating forex turnover and investor sentiment.

The PUNCH reported that the CBN Governor, Olayemi Cardoso gave the specific reasons for the significant decline in the reserves.

He explained, “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.

Nigeria’s economy is heavily reliant on oil exports, which account for over 90 per cent of its foreign exchange earnings.

Financial experts noted that the decline in FX reserves had led to a weakening of the naira, Nigeria’s currency, which has been struggling against the US dollar.

The naira has lost over 100 per cent of its value against the dollar since the beginning of 2024, making it one of the worst-performing currencies in Africa.

“The CBN has been intervening in the foreign exchange market to stabilise the naira and boost investor confidence.

“However, the decline in FX reserves has raised concerns about the country’s ability to meet its foreign debt obligations and finance its imports.

Nigeria’s FX reserves are a critical indicator of the country’s economic health, and the decline has sparked concerns among economic experts. The government has been under pressure to diversify the economy and reduce its reliance on oil exports.

“The decline in FX reserves is a clear indication that Nigeria’s economic challenges are far from over,” he added.

He urged that “the government must take urgent steps to address the decline in oil exports, boost foreign investment, and diversify the economy to prevent further decline in the country’s FX reserves.

Meanwhile, the naira began trading activity at the official market on a positive note, appreciating to N1,476 per dollar on Monday.

The currency increase in value was 0.61 per cent from N1,485.99 recorded on Friday.

The daily market summary released by the FMDQ showed that the intraday high closed at N1,500 from N1,550 per dollar recorded on Friday. The intraday low closed weaker at N1,250/$1 from N1,174.88/$1 quoted at NAFEM on Friday.

The dollar supplied by willing buyers and willing sellers was $121.87m.

mrvitalis:
Now that explains why naira is stable at 1500

Because based on the money printed under Tinubu we should be at 2200 to a dollar minimum

My prediction is still a dollar to 3500 by 2027

APC as a party know nothing about economics

mrvitalis:
Now that explains why naira is stable at 1500

Because based on the money printed under Tinubu we should be at 2200 to a dollar minimum

My prediction is still a dollar to 3500 by 2027

APC as a party know nothing about economics

helinues:
Toh

AqualinaXYZ:





Yea that’s your favorite line when you dumbfound by the failures of your master



But trust me anyone who contributed to foist this foolish Irigbaji criminal on Nigerians may Thunder strike that person or group of people



Every thing God blessed south south with Yoruba people don spoil am finish because una dey see free oil revenue

helinues:


Stop crying on my mentions profusely or would something terrible happen to you if you stopped?

Saintganduje:
I need a secretary.

helinues:


Stop crying on my mentions profusely or would something terrible happen to you if you stopped?

helinues:


Don't you have relatives to employ?

Just continue with the senseless years of trolling, your cup would soon full

helinues:


Don't you have relatives to employ?

Just continue with the senseless years of trolling, your cup would soon full

Iamgrey5:
local self acclaimed Economist.

The $1.6n is mostly used to service debt.

That's exactly why international banks kept saying your reserve is barely $6bn when it was reading $34bn. The majority of the reserve were used to borrow money.

mrvitalis:

This one thing reserve is actually money?

Wont you print naira to use to convert to dollars to service the loan?

You think FG owns the reserve?

Which school u go?

Iamgrey5:
local self acclaimed Economist.

The $1.6n is mostly used to service debt.

That's exactly why international banks kept saying your reserve is barely $6bn when it was reading $34bn. The majority of the reserve were used to borrow money.

Iamgrey5:
FG own reserves Mr local economist.

The FG prints money inline with our anticipated revenue from crude oil sales in dollars not our reserves.

mrvitalis:

Nigeria not FG and reserve is not liquidity
You have to bring naira to buy the reserve

This is basic economics oga

Iamgrey5:
Who do you put in charge of Nigeria through your votes?

And I can categorically tell you that you are saying bulshit.


Nigeria government do not prepare budget based off reserve but revenue.

A higher reserve is as a result of favorable balance of payment not money printed in the country or not.

What Buhari did for years was to borrow heavily to supplement the budget. He then used your foreign reserve as collateral.

mrvitalis:

CBN is an independent body oga

What are you even saying... Don't have time for these back and forth

Iamgrey5:
You don't know what you are saying.bru

Who ever said CBN is not independent?

Are you not the one mixed monetary and fiscal policy together, as if government just wake up and print money based on its reserve.