Nigeria’s external reserves has shrunk by $522,525,964 in 16 days.
According to recent figures on the Central Bank of Nigeria’s (CBN) website, on March 1, 2021 the external reserve was $34,998,144,389 but by March 16, it had shrunk to $34,475,618,425.
Since January 25, 2021 when the reserve stood at $36,469,940,426.08 it has been on a steady decline to the current $34,475,618,425. In other words, between January 25 and March 16, the external reserves declining declined by $1,994,322,001. That is a little shy of $2billion.
The CBN had recently stated that Nigeria’s external reserve at $35bilion was sufficient to finance the country’s seven months’ imports.
The rapid drop in Nigeria’s external reserve coincides with a steady rise in the price of crude oil sales which check recently rose to $71 per barrel within the same period.
Some reasons have been preferred for the sharp drop in external reserves. These include, the CBN’s intervention in the forex market to stabilize the exchange rate, and low foreign inflows.
It is believed that the drop in the country’s external reserve can be linked to shortages in the supply of foreign exchange brought on by a decline in the flow of forex into the country.
In addition receipts from the sale of crude oil take a while before they hit government accounts.
In recent times, forex inflows from International Money Transfer Operators (IMTOs) has whittled down, export proceeds have reduced drastically and flow from the the I and E window have declined as well. All these have prompted reactions from the CBN to change the volume of accretion into the external reserve positively.
Between January and March, many debt obligations matured thus prompting the CBN to make pay out for mature Euro bonds and promissory notes.
The apex bank also engaged in FX swap with international and local dealers a development which would have compelled the CBN to pay off matured obligations as expected of a sovereign.