Nigeria’s foreign exchange reserves have dropped by $1.82 billion over the past four months.
The long-running downtrend has stoked fears that the economy may in be for tougher time in the months ahead.
Official data and reports reviewed yesterday by The Nation Economic Intelligence indicated that the forex reserves had suffered consecutive declines since the beginning of this year.
The forex reserves dropped by $47.83 million last week to close the four-month period at $35.36 billion as against $37.08 billion recorded at the close of 2022. The April 2023 closing position represented the lowest point in recent months.
Analysts were unenthusiastic about the outlook for the nation’s forex reserves, with most experts expecting the reserves to continue deteriorating, a scenario that could worsen the country’s currency risks and delay recovery.
A member of Presidential Economic Advisory Council (PEAC), Bismarck Rewane, described the outlook for the nation’s forex reserves as negative.
“The external reserve is expected to continue its downward trend in the coming weeks as major sources of forex inflows deteriorate.
“This would be compounded by an adverse ruling in the ongoing P & ID trial. The $11bn arbitral award accounts for about 30 per cent of gross external reserves,” Rewane stated.
Rewane, Managing Director of Financial Derivatives Company (FDC), said the implication of the declining reserves was likely worsening of the country’s external imbalance and limitation of the Central Bank of Nigeria (CBN)’s supply of foreign exchange to support the naira at the forex market.