Nigeria’s Foreign Reserves Drop $2.20 billion, Increases Forex Problem

As at September 29, 2022, Nigeria’s foreign reserves fell to $38.318 billion, further compounding the scarcity of foreign exchange in the country’s official forex market.

In the last Monetary Policy Meeting (MPR) in August, the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, had said, “the Committee noted the marginal increase of 0.39% in the level of external reserves to US$38.46 billion at end-August 2022 from US$38.31 billion at end-July 2022 despite continued demand pressure.” 

However, in the last ten months, the country’s foreign reserves have dropped by $2.20 billion, which represents 5.42% decrease, from the $40.520 billion recorded as at December 31, 2021. 

Also, within one month of September, the foreign reserves depleted by $706 million from the $39.024 billion recorded on September 1, 2022. The reduction in the reserves means Nigeria didn’t benefit from the boom in crude oil price. 

Recall that crude oil had traded above $100 for a larger part of this year, resulting to high foreign exchange earnings for crude oil producing countries, but Nigeria couldn’t benefit due to oil theft, pipeline vandalism and its inability to increase fuel price over strike threat by the Nigeria Labour Congress (NLC). 

The oil industry is Nigeria’s major source of forex, but the sector has been contracting, with the non-oil sector saving the government’s revenue.  

During the MPC meeting, Emefiele said, “With crude oil price forecast to continue to moderate in the short to medium term, Members urged the Bank not to relent on the various policies put in place to support non-oil exports to shore up external reserves.”