Nigeria’s Foreign Reserves Shed $1 Billion, Biggest Fall In 17 Months - |Ads4naira Blog|

Nigeria’s Foreign Reserves Shed $1 Billion, Biggest Fall In 17 Months

Nigeria’s foreign reserves depleted by $1
billion in August 2019. This is reflected in
the data published on the website of the
Central Bank of Nigeria (CBN).
According to the data obtained from the
apex bank’s website, Nigeria’s foreign
reserves stood at $45 billion on the 25th of
July 2019, while the figure has recorded a
decrease and stood at $44 billion as of
23rd August 2019.
A closer look: Nigeria’s foreign reserves
crossed the $45 billion thresholds in May
2019. Hence, the reserves had built
significantly until the recent free fall.
• The latest drop is the biggest of Nigeria’s
foreign reserves in 17 months.
• The last time Nigeria posted exactly $44
billion reserves was March 2018.
• Nairametrics had equally published in its
recent articles that the country’s reserves
have been falling in recent weeks.
• In May 2019, the external reserves rose by
$212.2 million to hit $45 billion
markSpecifically, it took Nigeria 8 months to
build the external reserves to hit the $45
billion in May 2019.
• On August 7th, a report by
Nariametricsestablished the external
reserves fell by $327 million in less than
four weeks.
The reasons: While this is a major concern
for the Nigerian economy, possible factors
that must have triggered this big fall include
the big drop in oil price, rise in the
importation, CBN intervention foreign
exchange windows among others.
• For instance, Brent oil price currently
hovers around $50 a barrel, as trade tension
between the U.S and China intensifies.
• As at the time of filing this report, data
from shows that bent crude oil
price closed at $58.3 a barrel on Tuesday.
• An earlier report showed that the sharp
drop in oil price might threaten the
implementation of Nigeria’s 2019 budget
that was benchmarked at $60 crude oil per
• Other factors that may be responsible
include the slow down in the capital market
and possibly CBN interventions in the
Investors and Exporters’ window (I&E).
• Also, the growing external debt may also
be frustrating the Federal Government into a
financial strain.
• While Nigeria’s debt profile has become
worrisome, with the declining oil price, the
country’s reserves are the last resort.
Brewing Concerns: The Central Bank moves
in recent times suggest that the declining
foreign reserves are a major source of
concern. Analysts have noted that the CBN
would have to respond with policy
measures to avert slump in the economy in
the face of unfolding trade realities.
• The most recent policies of the CBN to
conserve the country’s reserves include the
planned Forex restrictions on food
importation, milk and other dairy products.
• The major decline in the country’s
reserves means the continuous fall in oil
prices is already biting very hard and this
may put the economy in a bad state.

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