New FX regime: External reserves sheds $1.8b in three months

The nation’s foreign reserves have dropped by a total of 1.8billion dollars. This is coming three months after the Central Bank of Nigeria (CBN) officially floated the Nigerian currency, naira, on 20th June this year, latest statistics on the official website of the apex bank has showed.

The balance on the external reserves stood at $26.4 billion three months ago when the CBN introduced the new foreign exchange regime by allowing the market to set the exchange rate freely, while abandoning a 16-month policy of pegging the currency at N197 to the dollar, but it is currently standing at $24.6 billion as at 26th of September, 2016.

While comparing the latest reserves data to the figure a week ago, it showed that it shed a total of $143million exactly a week after the Monetary Policy Committee of the central bank decided to retain the benchmark interest rates and other economic indices on Tuesday, 20th September this year.

It is worthy of notes that the external reserves have reduced from $26.51 billion from the second quarter of 2016 to $24.74 billion in September. And fell to $25.45 billion by August. 29, down 2.86 percent from the previous month, central bank latest data showed that the bank stepped up support for the ailing currency.

Dollar reserves of Africa’s largest economy stood at $26.20 billion in end of July. The central bank data showed reserves had declined 18.9 percent from a year ago.

However, the naira hit a fresh all-time low of 440 per dollar on the black market on chronic dollar shortages on Wednesday.

Although, the nation’s foreign exchange reserves have increased by $595m to hit a one-month high of $26.196bn, the latest data from the Central Bank of Nigeria have shown.

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

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

This showed that the apex lender participated regularly at the interbank market to prop up the naira since it floated it on June 20.

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 $26.6billion the same month.

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

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

But the reserves had dropped by over 10 percent from last year when they closed at $29.7billion.

The global plunge in oil prices has caused the persistent depletion of the nation’s foreign reserves. The development also forced the CBN to introduce foreign exchange controls, which were abandoned in June.