CEM REPORT, FINANCE | The gross external reserves of the country have fallen to a net balance of $37.11 billion as of the close of November.
This is the lowest balance since September 2021 when reserves fell to $36.7 billion and a fall of about $1.9 billion in 3 months since September 2022.
Nairametrics reports that the external reserves data from the apex bank, reveal the balance as of December 2nd, 2022 is just $37.07 billion and could fall into the $36 billion range in the next few days.
Nigeria’s external reserves are largely funded from export proceeds from the sale of oil and gas to other countries which has been dwindling resulting from crude oil theft.
However recent reports show that Nigeria’s daily crude oil production output rose above 1.59 million barrels per day according to the NNPC.
This could mean increased revenue for the country and might translate to higher external reserves.
Also, Nigeria’s external reserves are funded from foreign currency loans such as multilateral loans from the likes of the World Bank or IMF or the sale of Eurobonds.
However, Nigeria has not tapped the Eurobond market in over a year meaning the central bank has had to rely mainly on crude oil sales.
A drop in external reserves poses a challenge to the ability of the central bank to maintain some of the gains recorded against the dollar on the black market.
The lower the external reserves the higher the likelihood of the central bank considering a devaluation of the naira to stem the outflows.
Recall that the Central Bank of Nigeria (CBN) to stern inflation and shoring up the country’s forex reserves as it battles currency depreciation announced the introduction of new naira notes
It also recently announced it was reducing withdrawal limits over the counter cash to just N100,000 and N500,000 for individuals and corporates respectively.