NIGERIA’s foreign external reserves have dipped further by a $1.8 billion margin in barely 10 weeks – from $ 34.44 billion on March 18, 2024, to $32.69 billion on May 29.
The decline follows numerous interventions by the Central Bank of Nigeria (CBN) for the Bureau de Change Operators (BDCs) among others.
The decline represents 5.081 per cent within two months.
The apex bank has been notable for issuing dollars to BDCs below the official rate, which has huge economic implications for Nigeria’s foreign exchange market and the foreign reserve.
The decline showed a continued drop from the $ 36.1 billion recorded in May 2023, as the reserves have been declining steadily over the past few months, with a total decrease of $ 3.4 billion since February 2024.
Apart from interventions in the foreign exchange market, debt repayment, a significant decline in oil exports, a decrease in foreign investment, and a rise in imports were pointed out by experts to have been responsible for the decline.
Debt repayment recorded by the apex bank as of January 2024 was $560 million. It reduced to $ 283.29 million in February and then $276.16 million in March 2024.
Experts claimed that the apex bank must have been servicing foreign debts from the external reserves.
“Debt servicing and lending dollars to the BDCs at a lower rate than the official market rate are some of the issues that affects the reserve since we are not largely a productive economy,” an economist, Kingsly Obiakor told The ICIR.
The naira ended in May weaker despite a surge in dollar supply amounting to $4.60 billion in the official foreign exchange market.
The FX market closed for the month on Friday, May 31, with the naira losing 5.60 per cent as the dollar was quoted at N1,485.99, weaker than N1,402.67 quoted at the beginning of the month, according to data from the FMDQ Securities Exchange Limited.
The foreign exchange market closed for May 2024, with the dollar selling for N1,470, weaker than the N1,380 quoted at the beginning of the month.
At the same time, the currency’s performance this week reflects a significant struggle to maintain its value amidst fluctuating forex turnover and investor sentiment.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.