External Reserves Drop To $24bn

Oyetunji Abioye
The country’s external reserves have depleted further to a record-low of $24.8bn, according to the latest data posted on the Central Bank of Nigeria’s website.
The foreign exchange reserves fell by $600m in two weeks before shedding $1bn in four weeks, the CBN statistics showed.
Specifically, the reserves fell from $25.8bn on August 16 to $24.8bn on September 16. It decreased by $600m from $25.4bn recorded on August 31 to $24.8bn on September 16, the current CBN data revealed.
The spate of decline in the external reserves follows the CBN’s almost daily interventions at the interbank/official foreign exchange market in recent weeks, as chronic dollar shortage continues to weigh on the economy.
In its efforts to defend the naira and prevent it from falling further at the official interbank market, the central bank has been selling dollars there more frequently.
The naira had fallen to an all-time low of 365.25 to the dollar at the interbank market on August 18 before making a gradual recovery.
On Tuesday, the local currency traded at 307.25 against the greenback.
At the parallel market, the naira, which has been under persistent pressure, closed at 424 to the dollar on Tuesday, after trading at 425 against the United States currency on Monday.
The external reserves fell by 2.86 per cent to $25.45bn on August 29, 2016, up from the $26.2bn it recorded at the end of July.
Year-on-year, the reserves have fallen by 18.9 per cent. They had fallen by 0.4 per cent at the end of July, down from the $26.34bn recorded on June 29.
The foreign exchange reserves stood at $26.42bn on May 28, down by 9.2 per cent year-on-year.
The CBN had on June 20 lifted its 16-month-old currency controls and auctioned about $4bn on the spot and futures market to clear a backlog of dollar demand and help boost interbank market trading.
The global plunge in oil prices has caused the reserves to be depleting very fast. The development had forced the CBN to introduce foreign exchange controls, which were abandoned in June.
The CBN’s Monetary Policy Committee announced plans to adopt a flexible exchange rate policy after the external reserves fell to $26.56bn on May 23.
The external reserves have lost over $2bn this year. The nation recorded a balance of payments deficit of 1.4 per cent in its Gross Domestic Product at the end of 2015 owing largely to its first current account deficit (three per cent of the GDP) in over a decade.
The nation’s external reserves reduced by $6.7bn within a period of 21 months, the Minister of Budget and National Planning, Senator Udo Udoma, said on March 23.