External Reserves Dip By $4.643 Billion In Four Months

The sharp drop in crude oil prices and poor portfolio inflow have made Nigeria’ s external reserves to drop by $4.643 billion between January 2 and May 4, 2020, data from the Central Bank of Nigeria has revealed.

The coronavirus pandemic has also contributed to the significant drop.

The country’s reserves were $38.536 billion as of January 2, 2020, but they fell to $33.892 billion on May 4, 2020, thereby losing $4.643 billion in the months under review.

However, reserves slightly increased by $371.588 million between April 30 to May 4, from $33.521 billion to $ $33.892 billion. The surge represents the first inflow to the reserves since Jan 15, 2020.

In the first quarter of 2020, the reserves fell by $3.371 billion to $35.164 billion on March 31, from $38.54 billion as of January 2, 2020.

The falling earnings from crude oil exports would have ripple effect on the non-oil, non-agricultural economy which is still largely “dependent on the recycling of petrodollars and FX proceeds,” according to CBN.

 
“International reserves- almost half of which were the counterpart of short-term naira debt issued to non-residents at high rates by the Central Bank of Nigeria—fell, reflecting portfolio outflows and a deteriorating current account, which shifted into a substantial deficit as the goods and services trade balance deteriorated by 5.5 percent of GDP in 2019. As a result, international reserves had fallen to $36.7 billion by January 2020 (about 50 percent of the Fund’s ARA metric + oil buffer),” the apex bank wrote to the International Monetary Fund.