Foreign reserves drop by 3 percent in 18 days

Nigeria’s foreign exchange (FX) reserve has a 3 percent drop from $34.45bn on March 18, 2024 to $33.43bn in April 4, 2024, data from the Central Bank of Nigeria (CBN) has shown. The drop which was $1.02bn was despite the CBN’s defence of the Naira which has seen it appreciate considerably to the green back […]

Nigeria’s foreign exchange (FX) reserve has a 3 percent drop from $34.45bn on March 18, 2024 to $33.43bn in April 4, 2024, data from the Central Bank of Nigeria (CBN) has shown.

The drop which was $1.02bn was despite the CBN’s defence of the Naira which has seen it appreciate considerably to the green back

The reduction is the lowest level since February 20, 2024, when it was $33.42bn, marking a decisive end to a period of steady accrual, during which the reserve witnessed a 43-day surge, accruing $1.28bn between February 5 and March 18, 2024.

The CBN earlier attributed the rise to increased remittance payments from Nigerians abroad and heightened interest from foreign investors in local assets, including government debt securities. The apex bank also noted that the increase was due to reforms in the foreign exchange market and an increase in oil production amongst others.

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The downward trend reflects a significant drawdown in the reserves, which have been depleting since March 18, when they peaked at $34.45bn.

The reserves dropped to $34.39bn on March 19 and continued to fall steadily, hitting $33.57bn by April 2, and further sliding to $33.43bn by April 4.

Recall that the CBN has been actively intervening in the foreign exchange market to shore up the naira, which has been under pressure from various economic factors. This intervention often involves the sale of dollars to ensure sufficient liquidity in the market, an action that has likely led to a decrease in FX reserves.

Within the 18-day period under review, the CBN announced the complete clearance of the valid foreign exchange backlog and the sale of $10,000 foreign exchange to each Bureau De Change operator (BDC) in Nigeria at a rate of N1,251/$1.