External Reserves Drops By $915m After Naira Floating

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Nigeria’s external reserves fell by $915 million following the Central Bank of Nigeria’s formal floating of the naira and liberalization of the foreign currency market.

According to CBN statistics released on Sunday, reserves declined from $34.66 billion on June 14, 2023, when the naira was floated, to $33.74 billion on August 24, 2023.

On June 13, a day before the CBN announced the naira float, the naira closed at 471.67/$ in the Investor & Exporter FX market. Following the news, the local currency plummeted to more than 700/$ in the I&E window.

Since then, the naira has traded at or above 700 per dollar. On Saturday, the naira was purchased and traded for 900/$ and 915/$ on the parallel market. Pounds Sterling were purchased and traded for N1160 and N1180, according to Bureau de Change operators.

At the I&E window, the naira commenced trading on Friday at 773.29/$ and hit a high of 799.9/$ before closing at 778.42/$.

Mr Folashodun Shonubi, acting Governor of the Central Bank of Nigeria, stated at the most recent Monetary Policy Committee meeting, “Accretion to external reserves remains weak while foreign exchange demand pressure persists.”

While emphasizing that the apex bank will rescue the naira from further depreciation, he promised to crack down on unlicensed Bureau de Change operators.

The news comes after the Nigerian National Petroleum Corporation announced a $3 billion loan from Africa Import and Export Bank as a temporary solution to boost the country’s currency supply.

Aminu Gwadabe, President of the Association of Bureau De Change Operators of Nigeria, stated that the CBN will be severe on unlicensed operators in their attempts to stabilize the naira.

“At a sensitisation engagement between the CBN and a few of our compliance officers across the zones, the apex bank reiterated that by August 31, 2023, any breaches on the allowable margin of -2.5 per cent and +2.5 per cent on the average weighted rate of I&E closing rate, rendition of returns and payment of penalties, if any, will lead to revocation of the operating licence of the operator,” he said.

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