Modupe Gbadeyanka
By Modupe Gbadeyanka
For the first time in three months, the external reserves of Nigeria recorded a weekly rise last week, closing at $38.32 billion as at Thursday, January 16, 2020, which was the last update on the website of the Central Bank of Nigeria (CBN).
Data obtained from the CBN platform by Business Post on Monday revealed that the foreign reserves balance increased by 0.08 percent or $30 million from the $38.29 billion it settled the previous week.
Last week, Business Post reported how observers were expressing growing concerns over the rate the country’s reserves were depleting, nursing fears that the monetary policy makers may have to devalue the Naira.
This week, the Monetary Policy Committee (MPC) will hold its first meeting for this year in Abuja. The two-day event was earlier scheduled to commence today, but was shifted to Thursday and Friday.
After the meeting on Friday, Governor of the CBN, Mr Godwin Emefiele, will address the media on outcome of the deliberations and some analysts have predicted that the benchmark interest rate would be retained at 13.50 percent.
The reserves of Nigeria have been a major cause of worry for observers because of the way the central bank takes from the balance to defend the local currency at the foreign exchange (forex) market.
Many have argued that the interventions are not sustainable especially because of recent decline in the price of crude oil at the global market. The black gold remains the main source of foreign earnings for Nigeria, which is Africa’s largest economy.
In 2016, the country slipped into a recession as a result of drop in the price of crude oil as well as sharp fall in the volume of local production caused by attacks on oil facilities in the Niger Delta region.
It took several meetings with critical stakeholders in the oil-rich region, including militants carrying out the attacks, to stop the disruption of production of oil, which helped the nation exit economic crisis a year later.
However, since the level of output increased, the external reserves have struggled to continue an upward movement, falling from over $45 billion to its present level.
In the first week of 2020, the balance left on the reserves was $38.49 billion but dropped to $38.29 billion at the close of the second week, before rising to $38,32 billion last week, which was the third of the year.
