Deji Adeyanju has mocked the CBN Governor, Yemi Cardoso, and his tactics, which he used in the past weeks to increase the value of the naira, resulting in the country’s currency being the best-performing in the world for the month of April.
Nigeria’s foreign exchange (FX) reserves have experienced a significant decline, dropping by approximately $2.16 billion within 29 days, amidst the Central Bank of Nigeria’s (CBN) vigorous efforts to stabilize the naira. Current data from the CBN, as of April 15, 2024, indicates that the FX reserves now stand at $32.29 billion, a stark decrease from the $34.45 billion recorded on March 18, 2024.
Previously, Nairametrics reported a substantial depletion in the reserves, shedding about $1.02 billion in just 18 days, attributed to the CBN’s robust interventions in the FX market aimed at supporting the naira.
This ongoing trend underscores the persistent challenges facing Nigeria’s currency and highlights the proactive measures adopted by the central bank to manage market dynamics and enhance economic stability.
Lowest Reserves in Over Six Years
Nigeria’s foreign exchange reserves have plummeted to their lowest level since September 25, 2017, when they stood at $32.28 billion.
This six-year and six-month low marks a definitive end to a period of steady accumulation. During this time, the reserves experienced a 43-day surge, accumulating $1.28 billion between February 5 and March 18, 2024. The increase was attributed to heightened remittance payments from Nigerians abroad, increased interest from foreign investors in local assets, including government debt securities, reforms in the foreign exchange market, and an uptick in oil production, among other factors.
The consistent downward trajectory of Nigeria’s foreign exchange reserves, shedding approximately $2.16 billion from a peak of $34.45 billion on March 18, 2024, to a significant low of $32.29 billion by April 15, 2024, reflects the prevailing financial strain. The CBN’s efforts to maintain the stability of the naira amidst challenging economic conditions contribute to this depletion.
Likely Reasons for Depleting Reserves
Increased Central Bank FX Interventions: The CBN has escalated its intervention in various FX windows to stabilize the naira, including aggressive dollar sales, which reduce overall reserve levels.
Debt and Financial Obligations: Nigeria faces significant external debt service requirements, including payments on Eurobonds and other international financial obligations. Repayments of these debts require substantial amounts of foreign currency, further depleting reserves.
Low Oil Production and Revenue: Nigeria grapples with low oil production levels due to infrastructure challenges, oil theft, and vandalism, reducing the country’s primary source of foreign exchange revenue. Global economic conditions and policies influencing oil prices also impact reserves.
The depletion of FX reserves raises concerns about the country’s balance of payments and its ability to meet international obligations. A significant decline can affect investor confidence, potentially leading to a credit rating downgrade and impacting borrowing costs. The decrease may also limit the CBN’s intervention capacity in the currency market, potentially depreciating the naira further.
The IMF projects a significant reduction in Nigeria’s foreign reserves to $24 billion in 2024, foreseeing a challenging period through 2024–25, with hopes of recovery to $38 billion by 2028.
Deji Adeyanju stating via his X handle, said: “Baba Sope economists Lagos boys just cleaning out and hoping people can offload all their forex so they loot more.”
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Source: Bushradiogist