Nigeria’s foreign reserves has dropped drastically to $39.54 billion as at Tuesday 22, March 2022. The figure which stood at $40.52 billion last year, shed $975.7 million Year-to-date (YTD)
The figure climbed to about N41 billion with the $3.35 billion International Monetary Fund (IMF)’s special drawing rights (SDR) and Eurobond issuance few months ago. The boost could not sustain and a consistent gradual depletion in the past five months has been observed
Bismarck Rewane, the chief executive officer of Financial Derivative Company Limited, had warned last year that the reserves would nosedive to about $32 billion as the monetary authority would require between $8 billion and $10 billion to defend the naira.
Experts have continued to advocate for expanded real sector to curb dependence on importation. Alinco Dangote, last week said that industries such the just commission fertilizer plant is capable of bringing in USD25 billion in foreign exchange, exceeding oil proceeds of about USD20 billion. This is the kind of industrial activities needed to strengthen our currency and improve our reserve.
Guardian wrote that “the Central Bank of Nigeria (CBN) has continued to intervene in the official exchange to provide much-needed liquidity and sustain the value of the local currency in line with its managed float approach.
The intervention notwithstanding, market volatility continues across market segments. At the official Nigerian Autonomous Foreign Exchange (NAFEX) window, naira currently trades around N415.5/$, sometimes with about N50/$ intra-day trading margin.
FX illiquidity has reached an all-time high (ATH) at the parallel market with naira exchanging for about N585/$ at person-to-person (P2P) platforms yesterday.”