The Central Bank of Nigeria’s continued intervention across the various foreign exchange windows has further depleted the country’s foreign reserves to $34.85 billion as of December 14.
Nigeria’s foreign reserves last suffered its lowest descent in April when it dropped to $33.4 billion following the COVID-19 pandemic and declining oil prices.
According to data released by the apex bank, the country’s foreign reserves dropped $805 million from $35.656 billion as of November 4, 2020.
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Nigeria’s foreign reserves was $38.5 billion as of January 2020, subsequently, it dropped to $36 billion the following month and beginning of March. The descent continued reaching $35 billion in late March and crashing further in April to $33 billion.
The country relies on its foreign reserves as a buffer for its local currency and also covers the country’s import obligations. The sale of crude oil has been Nigeria’s major source of foreign exchange over the years. Its other sources are foreign investments and external loans.
The Central Bank of Nigeria has devalued the Naira three times in 2020. The currency trades at N383 per dollar in the investors and exporters window, a 20 percent variance from the parallel market rate.
The World Bank’s approval of $1.5 billion loan request could take some pressure off the country’s foreign reserves.
