Nigeria’s foreign exchange reserves plunged to a 12-week low of $35.63 billion on Wednesday, its lowest point since 21st August, when $35.607 billion was recorded, data gleaned from the Central Bank Nigeria (CBN) on Friday, November 13, 2020 showed.
The reserves have been recording falls in recent months, dipping to $35.69 billion on 28th October from the $35.74 billion reported on 30th September.
Africa’s biggest economy, which is propped on revenue from oil money, the provider of around 90 per cent of its foreign exchange, has been taking a battering from the novel coronavirus, forcing it to cut its spending plan for next year by around 40% and the record slump of crude prices in April, has piled on the agony.
Its foreign exchange reserves touched a record low of $33.43 billion on 29th April before rescue came its way by way of a $3.4 billion COVID-19 stimulus package from the International Monetary Fund, IMF.
“External reserves are expected to lie between $29.9 billion and $34.3 billion at end-December 2020 (predicated on current declining oil price between $20 and $40),” the apex bank said in a recent report.
“Sequel to the COVID-19 pandemic, the viability of the external sector in 2020 is expected to deteriorate, given the present worsening current account balance and depletion of external reserves driven, largely, by decelerating export receipts, particularly oil.
“Specifically, the degree of external reserves accumulation is expected to decelerate, as outflows are expected to outweigh inflows,” it added.
Bismark Rewane, chief executive at business intelligence firm Financial Derivatives, forecasted last week Nigeria’s fore supply would remain limited, with oil prices still under strain.
“The CBN will maintain its forex rationing stance and intensify efforts to keep the naira stable. External reserves to likely fall towards $34bn in the coming months.”