How Nigeria’s Foreign Reserves Dipped By Over N867 Billion

By Tolulope Oke

Nigeria’s foreign reserves dipped by over N867 Billion ($2.202 billion) to $38.318 billion as of September 29, 2022, from $40.520 billion as of December 31, 2021. This is a 5.42% decrease in foreign reserves.

The reserves have been drained by billions of dollars despite this year’s increase in oil prices. From $39.024 billion on September 1, 2022, the country’s reserves decreased by $706 million last month.

Meanwhile, CBN Governor, Godwin Emefiele noted that in the expectation that the rise in oil prices would increase the reserves, the apex bank would maintain its interventionist strategy.

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He said “the Committee noted the marginal increase of 0.39% in the level of external reserves to US$38.46 billion at end-August 2022 from US$38.31 billion at end-July 2022 despite continued demand pressure. With crude oil price forecast to continue to moderate in the short to medium term, Members urged the Bank not to relent on the various policies put in place to support non-oil exports to shore up external reserves.”

Notably, the scarcity of foreign exchange in the Nigerian economy is causing the local currency to depreciate even more on the FX market as currency traders continue to worry about the lack of available forex liquidity. Despite the central bank’s intervention in the currency market, there is currently a forex crisis.