Nigeria’s external reserves have lost about $1.9 billion, between February and March, falling to $35.979 billion.
The reserves as of February 3, were $37.879 billion, while the latest figure provided by the CBN as of March 18, was $35.979. This represents a 5% decrease from the February 3 amount.
The reserves within the first 18 days of March lost $320.23 million, attributable to pressure from the drop in global oil price which as of Friday sold for $32.16 per barrel,
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Oil prices slid in response to the reduction in global oil consumption caused by the outbreak of COVID-19.
The slump in prices has led to the reduction of the 2020 budget oil benchmark to $30 per barrel, while the budget was cut by 20%, representing N828.9 billion ($2.7 billion).
President Muhammadu Buhari had in December 2019, approved N10.33 trillion ($33.6 billion).
The CBN reacted by rolling out over $1.2 billion in interventions.
Oil revenue accounts for 90% of Nigeria’s foreign exchange earnings. With the current price at $32.26 per barrel and the dwindling reserves, the apex bank’s capacity to defend the Naira has weakened.
Moody’s Investors Service had said that if the low crude prices lingered for a long time, it would weaken dollar liquidity and increase bank asset risks in Nigeria.
According to a data by Bloomberg, the average yields on naira government bonds have fallen 709 basis points to 12.6% since January 2020. This signals outflows as a result of risk -off appetite of investors.
Fall in the oil price and depletion of reserves have also triggered bearish sentiment in the domestic bourse, dragging the All-Share Index to 22,198.43 points on Friday, March 19, 2020 from 26,842.07 points recorded in the last trading session of 2019.
Conversion rate was N307 per dollar.