External reserves drop to $42.86bn in February

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Nigeria’s foreign exchange reserves is at a two-month low of $42.86bn, according to the latest data from the Central Bank of Nigeria.

The reserves, which was at $43.174bn on January 31, dropped by $314m in two weeks to $42.86bn on February 14.

It will be recalled that the external reserves had risen to an all-time high of $47.865bn on May 10, 2018, but plunged to $41.523bn on November 22. As of  December 13, 2018, the reserves stood at $42.877bn.

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A new report by PwC Nigeria, titled “Nigeria economic outlook – Top 10 themes for 2019’, said the CBN increased dollar injections into the forex market by 87 per cent to $40bn in 2018. This was said to sustain its policy of exchange rate stability amid sustained demand pressures.

The report, however, noted that the decreased external reserves and increased forex demand is historically connected to the election period.

It cited the 24 per cent decline in external reserves between January 2010 and May 2011, and a 30 per cent decline between January 2014 and May 2015.

Also, analysts at Cordros Capital said on Friday that the forex reserves depleted for the second straight week as the CBN recorded another foreign reserve drawdown of $88.07m week-on-week to $42.86bn.

They said, “Meanwhile, total turnover at the Investors and Exporters window dipped by 38 per cent to $1.03bn. The naira appreciated slightly by 0.02 per cent to 361.65/$ in the I&E window but saw a marked depreciation of 0.28 per cent to 362/$ at the parallel market.

“At the forwards market, the USD/NGN appreciated across all contracts – the three-months (+0.11 per cent to N370.68), six-months (+0.14 per cent to N382.26), and one-year (+0.03 per cent to N412.11) – save for the one-month, which declined by 0.08 per cent to N368.24.”

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