The country’s foreign exchange reserves continued its downward trend as it dropped from $39.8bn on November 11 to $39.24bn on December 13, latest figures from the Central Bank of Nigeria have revealed.
The reserves fell by $1.26bn from $41.76bn on October 2 to $40.5bn as of the end of the month.
According to the CBN, the reserves dropped by $482.18m from N45.14bn as of July 8 to $44.65bn on August 8, 2019.
Godwin Emefiele, the CBN governor, said recently that Nigeria’s overdependence on crude oil for over 60 per cent of fiscal revenue and over 90 per cent of forex inflows meant that shocks in the oil market were transmitted entirely to the economy via the forex markets as manufacturers and traders who required forex for input purchases were faced with dwindling supplies.
He said, “Average monthly inflows of forex into the CBN fell from over $3.4bn in June 2014 to a low of $1.4bn in September 2016. The decline in forex earnings was further complicated by the foreign capital flow reversals due to rising yields in the USA. The impact on our economy was evident in the rising pressure on the naira-dollar exchange rate.
“With the drop in forex inflows, the exchange rate at the parallel market rose from about N200/$ in August 2015 to N525/$ in February 2017. Inflation also rose from 9.6 per cent in January 2016 to over 18.7 percent in January 2017.
“Our external reserves fell from about $31bn in April 2015 to $23bn in October 2016, and activities in the industrial sector witnessed a lull as manufacturers struggled to get access to key inputs needed in the production process.”
He said the CBN introduced a demand management approach in order to conserve the country’s reserves and support domestic production of certain goods in Nigeria.