Due to the country’s continuing foreign exchange insecurity, Africa’s largest economy’s external reserves fell by around $77.23 million, or 0.23 percent, in December 2023.
According to information provided from the Central Bank of Nigeria, Nigeria’s external reserves, commonly known as foreign reserves, amounted at $32,892,386,111 as of December 28, 2023. The liquid part was $32,164,718,095 and the obstructed portion was $727,668,016.
The external reserves amount was close to $33 billion at the start of the final month of 2023 ($32,969,611,433), with $32,212,850,183 accessible for usage and 756,761,250 blocked. As of November 30, 2023, the country’s foreign reserves stood at $33,004,054,737.
Foreign exchange reserves are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and maintain confidence in financial markets.
The country’s monetary policy managers have failed in their quest to grow and sustain foreign reserves over time.
Nigeria’s foreign reserves rose to about $47.37 billion as of April 5, 2018, but had recorded a sustainable decline in the past five years. The former CBN Governor, Godwin Emefiele, had set a target of $50 billion before the end of 2018, but that aspiration has not materialized.
Fitch Ratings on September 6, 2023, said, ‘’Nigeria’s weaker net international reserve position, emphasises the sovereign’s external vulnerabilities. Exchange-rate liberalisation and improvements in the overall monetary policy framework could strengthen the sovereign’s credit profile by easing foreign-currency supply constraints, but a recent loss of reform momentum and the constrained reserve position highlight the significant challenges such policy adjustments face.
‘’When we affirmed Nigeria’s rating at ‘B-’ with a Stable Outlook in May, we stated that external finances were a key rating sensitivity. We estimated that around 30% of Nigeria’s gross reserves (which were USD37 billion at end-2022) comprised swaps with domestic banks, although we considered that some other reserves could well be encumbered.’’
Meanwhile, the government through the CBN had made efforts to stabilize the nation’s external reserves by boosting the forex supply in the system.
The PUNCH reported in November that the Federal Government through the Central Bank of Nigeria, commenced payment of outstanding matured FX forwards owed to various creditors.
The amount of overdue forward payments was estimated at $6.7 billion, according to the Minister of Finance, Wale Edun.
