By Dipo Olowookere
In one week, the foreign exchange (forex) reserves of Nigeria went down by $224 million or 0.54 per cent, data from the Central Bank of Nigeria (CBN) has revealed.
Business Post reports that within five business days, the FX stockpiles of the nation, which prides itself as the largest economy in Africa, depreciated to $40.931 billion on Wednesday, December 8, 2021, from $41.155 billion it ended on Wednesday, December 1, 2021.
According to the figures obtained from the apex bank, the external buffers of the country closed on December 1 at $41.155 billion and went down to $41.118 billion the next day before declining to $41.086 billion on Friday.
On the first trading day of last week, the forex buffers of Nigeria further depleted to $40.972 billion and on Tuesday, it dropped to $40.951 billion before receding to $40.931 billion last Wednesday.
It was observed that the gradual depletion in the amount left in the FX accumulations account was as a result of the use of the funds to defend the Naira at the foreign currencies market.
The central bank regularly dips its hands into the reserves to take the forex to sell to FX traders so as to keep the value of the Naira to the Dollar and other major foreign currencies relatively stable at the market.
Last week, the apex bank injected $210 million into the FX market with $100 million supplied to the Wholesale Secondary Market Intervention Sales (SMIS), $55 million allocated to Small and Medium Scale Enterprises and another $55 million allocated for invisibles, which include payment for medicals and school fees abroad.
Despite the supplies to the market, the Naira depreciated against the Dollar at the Investors and Exporters (I&E) FX window last week by 0.09 per cent or 37 kobo to settle at N415.10/$ compared with the previous week’s N414.73/$1.
Another factor that could have affected the decline in the foreign reserves was the unstable nature of the price of crude oil in the week under consideration.
The commodity remains the main source of FX earnings for Nigeria and a drop in the price, which is determined by the international market, affects the nation’s earnings.
