Nigeria’s Foreign Reserves Extends Dip To $1.2bn As Naira Near N600 At Black Market

Nigeria’s foreign reserves have extended its loss to $1.2bn since December 31, 2021, an analysis of data from the Central Bank of Nigeria reveals.

The reserves dropped to $39.3bn on May 6, down from the $40.42bn recorded on December 31, 2021.

The reserves lost 2.98 per cent of its value in the last four months and six days.

The naira has dropped to as low as N595 per dollar in the parallel market, down from the about N560 per dollar traded on December 31, 2021.

Nigeria is currently suffering the shocks of crude oil theft and subsidy payment which the government said is eroding the benefits of the high crude oil prices backed by the Russia- Ukraine war.

Crude oil prices are around $104.2 for Brent Crude, while West Texas Intermediate is selling for $101.5. The prices had risen to over $117 per barrel in March.

Nigeria’s economy relies on oil for over 90 per cent of foreign exchange earnings which experts believe is not sustainable for a healthy currency.

The Central Bank of Nigeria governor, Godwin Emefiele, is currentling betting on the Dangote Refinery to ease pressure on the naira.

Emefiele also believes that restricting dollars for the import of commodities like wheat would also save the country billions of forex. Currently over 42 items are on the ban list.

In February, the bank introduced the R200, a forex policy that would help the country earn $200bn from non-oil proceeds over the next five years.

Emefiele said, “With Dangote refinery coming up with the 650,000 barrel refinery, hopefully by around the end of the year, that will also hopefully reduce the demand for foreign exchange that normally will go for the importation of petroleum products.

“I have often said, between the importation of refined products alone into importation of rice or sugar or wheat, this consumes close to about 40 per cent of foreign exchange that is needed to fund import in Nigeria.

“If we find for instance a situation where by the end of this year, we are no longer going to be needing foreign exchange to import petroleum products, I believe that demand will drop. As demand drops, what you will find is that whatever supply is able to match demand, we can see a stable exchange rate.”