Sustained shortages of US dollar has forced Nigeria’s external reserves into a massive decline hitting a new low of $29.746 billion Monday while Naira value deteriorated in the unofficial foreign exchange market.
At current level which shows that the reserve position has completely eroded the gains it made shortly after the inauguration of President Mohammadu Buhari regime, Nigeria could barely finance four months’ imports.
According to the external reserve data of the Central Bank of Nigeria (CBN), the external reserves has declined by $4.722 billion, about 13.8 per cent, so far this year.
The declining trend has been steady this year until middle of the year when it reversed with CBN governor announcing a major jump to $31.89 billion in July.
However fresh pressure on the reserves had resumed as oil prices hit new lows, a development which prompted the apex bank to renew restrictions on utilization of foreign exchange across all segments of the foreign exchange markets in the second half of the year.
The apex bank has also struggled to defend Naira exchange rate by supplying foreign exchange directly to Bureau de Changes (BDCs) and banks at controlled exchange rate of N197/$1.0 and N199.07/$1.0 for its clearing rates and inter-bank rates respectively.
But as a result of the sustained pressure on the external reserves and other management bottlenecks, the situation in the parallel market remained bleak forcing Naira value down to N250/$1.0 last weekend.
Even in the BDC segment, the local currency took a heat depreciating to N245/$1.0.
-Vanguard
