Nigeria’s foreign reserves have dropped by $2. 2 billion

Nigeria’s foreign reserves have dropped by $2. 2 billion amid concerns of the central bank’s support for the Naira and the settlement of over $2 billion foreign exchange backlog.

This is coming on the heels of comments by the Chief Executive Officer of Financial Derivatives, Bismark Rewane, where he stated that the Central Bank of Nigeria (CBN) had spent $8.8 billion defending the Naira.

In its recent investor’s note, AIICO Capital Limited emphasised that trading activity was robust, with transactions occurring within the $/N1,490.00 to $/N1,520.00 per US dollar range, saying the Naira will continue to trade at the current level.

By analysts’ consensus, the money pricing was majorly influenced by the CBN intervention. Daily Trust gathered that the authority intervened in the foreign exchange market, selling US$66.80 million to authorised dealer banks. The sustained FX sales to banks also bolstered FX supply to the Bureau de Change.

Hence, the Naira gained N8.62 and N50.00 to close at $/N1,501.08 and $/N1,510.0 in the official and parallel markets, respectively. According to TrustBanc Financial Group Limited, Nigeria’s FX reserves level declined by USD300.11 million week on week to USD38.74 billion, marking the 6th consecutive week of decline.

According to Bloomberg data, forex reserves shrank by $2.2 billion since hitting a $40.92 billion high on Jan. 6. The slide is the longest since November 2022 and will reduce Nigeria’s reserves to their lowest level since October. Before then, foreign reserves stood at $42bn on December.