In Eight Days, External Reserves Drop By $196m

Nigeria’s external reserves drop by $196m in eight days to $39.62bn as of April 28, according to figures obtained from the Central Bank of Nigeria.

The CBN revealed that the reserves, which had earlier gained $243.83m in 19 days from $39.54bn as of April 1, 2022 and rose to $39.78bn as of April 19, 2022, returned to a downward path.

The external reserves fell by $313m in March, after starting the month at $39.86bn, before falling to $39.55bn on March 30.

The Bankers’ Committee has expressed the need for the country to boost revenue from non-oil sector to reduce impact of volatile oil price on the country’s reserves.

Earlier, the Governor, Central Bank of Nigeria, Godwin Emefiele, and the Bankers’ Committee had launched a programme tagged ‘RT200 FX Programme’ to boost forex supply in the country through the non-oil sector in the next three to five years.

Emefiele said, “After careful consideration of the available options and wide consultation with the banking community, the CBN is, effective immediately, announcing the Bankers’ Committee “RT200 FX Programme”, which stands for the “Race to $200bn in FX repatriation.

“The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable us attain our lofty yet attainable goal of $200bn in FX repatriation, exclusively from non-oil exports, over the next three to five years.”

Cordros Securities, in its weekly economic and market update on overview of markets in the week ended 29 April 2022 on foreign exchange, stated that, “In our opinion, the CBN has enough supply to support the FX market over the short term, given inflows from the recently issued Eurobond and the IMF’s SDR.

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“However, foreign inflows are paramount for sustained FX liquidity over the medium term, in line with our expectation that accretion to the reserves will be weak given that crude oil production levels remain pretty low.

“Thus, FPIs which have historically supported supply levels in the IEW (53.8 per cent of FX inflows to the IEW in 2019FY) will be needed to sustain FX liquidity levels.

“Hence, we think (1) further adjustments in the NGN/USD peg closer to its fair value and (2) flexibility in the exchange rate would be significant in attracting foreign inflows back to the market.”