Nume Ekeghe
Despite recent clarification by the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, numbers from the CBN has revealed a concerning trend in the country’s external reserves, which have continued to decline, reaching a new low of $32.1 billion as of April 18, 2024.
This marks a significant decrease from previous levels, with the reserves standing at $32.29 billion on April 15, $32.20 billion on April 16, and $32.12 billion on April 17 before hitting the new low.
Analysis of CBN data indicates that the last time reserves reached such levels was on September 29, 2017, when it stood at $32.49 billion.
Speaking at the just concluded IMF/World Bank spring meetings in Washington DC, United States, Cardoso, addressed concerns over the drop in reserves, attributing it to typical fluctuations related to debt obligations and incoming funds.
He highlighted recent inflows of about $600 million into the reserves account and emphasized that the CBN’s focus remains on maintaining an independent market driven by willing buyers and sellers.
He said: “And what you have seen with respect to the shifts in our reserves, is a shift that you will find in any country’s reserves situation, where for example, debts are due and certain payments need to be made, they are made because that is also part of keeping your credibility intact.
“And other times money comes in. And you know, it takes the reserves up again, and if you watch in the next couple of days, which I think between yesterday (Tuesday) and today (Wednesday) we had about $600 million that came into the reserves account.”
He emphasised that there’s no need for undue excitement, saying, “our focus remains on fostering a market that operates independently, driven by willing buyers and sellers and facilitating price discovery.
He said, “The shifts you’ve seen in our reserves has really little or nothing to do with defending any naira and that is certainly not our objective.”
The trajectory of Nigeria’s reserves has been volatile, with fluctuations observed over the past several months. In February 2024, reserves reached a four-month high of $33.45 billion before reversing course.
A one-month analysis revealed a steady decline from $32.61 billion on April 12 to the recent low of $32.1 billion on April 18.
Despite ongoing fluctuations, the CBN has implemented strategies to support the naira, including discounted sales to Bureau de Change operators and interventions in the official window. However, with talks with the World Bank for concessionary loans as well as other multilateral loans, the reserves are slated to rise in the near term.
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