Godwin Emefiele, Governor of Central Bank of Nigeria,
Nigeria’s external reserve drops by $24m in opening week of January
Nigeria’s external reserve has dropped by $24.3 million in the first week of 2022, barely two weeks after it grew by $5.15 billion, according to the Central Bank of Nigeria (CBN).
The drop means the country’s reserves stands at $40.49 billion as of 7th January 2021, representing a 0.06% decline when compared to $40.42 billion recorded as of the start of the week.
Data CBN on the daily reserve movement had shown a gain of $5.99 billion in October, following a $2.76 million gain recorded in September 2021 as a result of the $4 billion Eurobond secured by the Federal Government and the $3.35 billion International Monetary Fund (IMF) Special Drawing Rights facility.
However, the reserve began a downward movement in November, 2021 after it crossed the $41 billion mark, as it lost $611.01 million in November, followed with a $666.17 million drop in December.
The continuous decline in the nation’s external reserve is attributable to the intervention by the CBN in ensuring forex stability in the country.
Data from the CBN shows that a total of $8.97 billion was supplied by the bank to the I&E window, SME, and Invisibles.
The Investors and Exporters window (I&E) is the official market for the sale of foreign exchange in the country after the Central Bank halted the sale of forex to BDC operators mid-2021. However, the sum of $2.77 billion had been sold to the BDC operators between January and June 2021.
Given the managed floating foreign exchange system adopted by the apex bank, the CBN occasionally intervenes in the forex market to ensure they manage the volatility that could be witnessed in the market by releasing funds from the reserve.
