The Nigerian external reserves have dropped by 1.24 per cent in 17 days. On March 10, the reserves dropped to $34.67 billion, from $35.17 billion on February 24.
This means that the reserves shed $433.7 million in less than three weeks. Earlier, New National Star had reported that the country’s external reserves sunk by $1.3 billion in 31 days after peaking in January at $36.5 billion. This situation has contributed to factors discouraging external investors, according to a Bloomberg analysis.
The drop has continued despite the rise in oil prices which was expected to boost the economy that had just recently exited recession by a slight margin. The recession was partly caused by the fall in oil prices in 2020. The Monetary Policy Committee of the Central Bank of Nigeria (CBN) attributed the exit to stimulus loans and grants given to individuals and households.
The Naira also suffered setbacks, depreciating by N5 to the dollar over the course of the past week in the parallel market. Last Friday, abokiFX reported that the Naira exchanged for N485 to the dollar. At the close of the week on March 5, the Naira exchanged for N480 to one dollar.
While the CBN under the direction of Godwin Emefiele has continued to find measures to strengthen the Naira in the forex market, analysts have frowned on the continued focus on the demand side and the use of short term policies rather than on the supply of forex into the market. While Nigerian financial authorities await the $1.5 billion loan from the World Bank which they hope will stimulate the economy, the World Bank has asked and sought reforms that will unify the multiple exchange rates of the naira, control inflation and remove barriers to capital flows.