External reserves sheds $1.02bn in three months

Cost of operating TSA is not sustainable but….Buhari’s minister
Kemi Adeosun, Nigeria's Minister of Finance
United Bank for Africa

Nigeria’s external reserves fell to $25.41billion as at August 31, 2016, compared to $26.44 billion it stood at on June 20this year, shedding a total sum of $1.02 billion in three months, latest Central Bank of Nigeria (CBN) statistics data has shown.

The apex bank’s latest figure showed that the foreign exchange reserve stood at $25.78 billion as at August 16, which was a decline of about 2.11 percent when compared to the previous month’s data.

This development was linked to the incessant dollar sales by the bank to boost interbank liquidity and support the local currency, the naira.

Meanwhile, it was observed that the CBN has been selling dollars almost daily on the interbank market to prop up the currency. The naira touched an all-time low of 365.25 per dollar on Thursday at the interbank market.

Africa’s largest economy’s dollar reserves stood at $26.20 billion at the end of July, an indication that the reserves had declined 18.9 percent compared to the corresponding month in 2015.

However, the naira hit a fresh all-time low of 420 per dollar on the black market on chronic dollar shortage on Wednesday, same day Africa’s most populous nation officially slid into a recession.

It however, noted that the nation’s foreign exchange reserves increased by $595million to hit a one-month high of $26.196 billion at the end of July, 2016.

External reserves stood at $25.6bn as of August 24, down from $26.21bn on July 28, the CBN data showed.

The reserves declined from $26bn on August 4, 2016 to $25.97bn on August 5 as the CBN stepped up dollar sales to boost liquidity at the interbank market and support the ailing naira.

The CBN has been selling dollars regularly at the interbank market to prop up the naira since it floated it on June 20. The currency touched an all-time low of 365.25 per dollar on August 18 at the official market.

But in June and July, the reserves hovered between $26.3 and $26.4billion, but fell to $26.12 billion on August 1.

The reserves had stood at $26.4billion between May 24 and 27, after dropping to $26.5 billion from $26.6 billion the same month.

Between May 31 and June 7, the external reserves stood at $26.3 billion, before rising back to the $26.4 billion mark on June 8, a level it maintained up until June 24. On June 27, it fell back to $26.36 billion.

The CBN had in June lifted its 16-month-old currency controls and auctioned about $4billion on the spot and futures market to clear a backlog of dollar demand to help boost interbank market trading.