Nigeria’s External Reserves Sink to Six-Month Low, Drops Below $43bn

By Dipo Olowookere

For the first time in six months, the foreign reserves of Africa’s largest economy, Nigeria, went down to a level last witnessed about six months ago, latest data harvested by Business Post has revealed.

According to the data from the Central Bank of Nigeria (CBN), the external reserves of the country stood at $42.957 billion as at Tuesday, September 10, 2019.

The last time is was around this region was Wednesday, March 13, 2019, when it closed at $42.928 billion and on Thursday, March 14, when it finished at $42.987 billion before moving to $43.051 billion on Friday, March 15, 2019.

Business Post reports that the reserves have been depleting lately as a result of decline in the price of crude oil on the lobal market. The black liquid gold is the main source of foreign exchange for Nigeria and when prices go low, the economy suffers.

In the 2019 budget signed into law in May 2019 by President Muhammadu Buhari, the benchmark price for oil was set at $60 per barrel and in recent times, the commodity has sold below this.

On Wednesday, the Brent Crude, which Nigeria’s oil is priced, dropped from $62, losing $1.34 or 2.15 percent to trade at $61.04, while the West Texas Intermediate (WTI) Crude went down to $55.97 after losing $1.43 or 2.49 percent.

For the past months, the spat between the United States and Iran, US and China, the United Kingdom and Iran and others have had negative effects on the price of crude oil at the international market.

A further analysis of the movement in Nigeria’s external reserves showed that before falling below $43 billion on Tuesday, the reserves stood at $43.004 billion on Monday, September 9, 2019 and $43.102 billion on Friday, September 6, 2019.

There are strong indications that the foreign reserves would continue to decline as price of crude oil remain unstable at the market and the CBN continue to take from the purse to support the Naira at the foreign exchange market.

On Tuesday, another $210 million was made available to authorized forex traders to keep the local currency stable at N360/$ at the market. Tomorrow, Friday, September 12, 2019, the apex bank is expected to make another intervention in the market.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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