CBN’s effort to sustain Naira pushes foreign reserves below $39bn

For the first time in nine months, Nigeria’s foreign reserves have dropped below $39 billion following the Central Bank of Nigeria (CBN) continuous withdrawal to defend the Naira.

The decline in the external reserve level can be attributed to the continuous intervention by the Central Bank in the FX market in order to ensure the stability of the local currency.

A check on the Central Bank of Nigeria (CBN) website showed that as at 16th May 2022, Nigeria’s foreign reserves stood at $38.91 billion. The last time Nigeria’s reserves fell below $39 billion was on Tuesday, 10th August 2021.

A deeper analysis of the foreign reserves further revealed that the CBN has made no deposits but has withdrawn about $892.3 million since April 21.

When further compared to $40.51 billion the reserves stood as at Friday, January 1, 2022, CBN has pulled out a total of $1.59 billion since the beginning of 2022.

At the last Monetary Policy Meeting, CBN expressed optimism that the recently launched “Race to US$200 billion in FX Repatriation” policy would improve foreign exchange supply and strengthen relative exchange rate stability.

It said, “This policy complements fiscal sector initiatives to diversify the economy and enhances the renewed focus on improving domestic economic productivity.”