Nigeria’s external reserves have dropped by 11.55 per cent ($4.28 billion) year-to-date as the naira steadily fluctuates against the dollar in 2023.
Data from the Central Bank of Nigeria, CBN, showed that external reserves, the stock of foreign assets held by the apex bank, fell to $33.78 billion as of December 20, 2023, from $37.06 billion recorded on January 3, 2023.
The continued decline in foreign currency reserves followed low revenue from crude oil sales and increased demand for foreign exchange (FX), among other factors.
Nigeria, Africa’s largest economy, heavily relies on oil exports, but oil revenue has declined due to various factors. Geopolitical events and market conditions can cause oil prices to fluctuate, impacting Nigeria’s revenue.
As a result, Nigeria’s naira has steadily fallen against other currencies due to pent-up demand amid the dollar supply shortage.
In the year under review, the naira/dollar exchange rate depreciated by 125.55 per cent (N578.70) at the Nigeria Autonomous Foreign Exchange Market (NAFEM), the official FX window.
Data from the CBN indicated that the dollar was quoted at N885.88 as of December 23, 2023, as opposed to N460.93, which was quoted in the year’s first quarter.
At the parallel market, also known as the black market, the naira weakened by 62.16 per cent as the dollar was sold for N1,223 as of December 25, 2023, compared to N740 at the beginning of the year.
Speaking on the country’s foreign reserves, Olayemi Cardoso, governor of the CBN at the Chartered Institute of Bankers of Nigeria (CIBN) ‘s bankers dinner last month, said, “We envision that, with discipline and focused commitment, foreign exchange reserves can be rebuilt to comparable levels with similar economies.”
According to the CBN’s most recent data on external reserves, Nigeria’s gross official reserves fell by $392 million month-on-month (m/m) to $33.0 billion in November 2023.
