Data from the Central Bank of Nigeria (CBN) reveals a significant drop in Nigeria’s foreign exchange reserves, which have decreased by $1.8 billion in just 10 weeks. As of May 29, 2024, the reserves stood at $32.69 billion, down from $34.44 billion on March 18.
This decline marks a notable decrease from the $36.1 billion recorded in May 2023. The reserves have been on a steady downward trend over the past few months, with a total reduction of $3.4 billion since February 2024, according to PUNCH.
Experts attribute this decline to several factors: debt repayment, a significant fall in oil exports, a decrease in foreign investment, and a rise in imports.
The CBN reported that debt repayment stood at $560 million in January 2024, decreased to $283.29 million in February, and further dropped to $276.16 million in March 2024. Analysts suggest that the CBN has been using external reserves to service foreign debts.
Despite an increase in dollar supply, amounting to $4.60 billion in the official foreign exchange market, the naira weakened in May. The FX market closed the month with the naira losing 5.60 percent, with the dollar quoted at N1,485.99, compared to N1,402.67 at the start of the month, according to data from FMDQ Securities Exchange Limited.
By the end of May 2024, the dollar was selling at N1,470, weaker than the N1,380 quoted at the month’s beginning. This reflects the naira’s struggle to maintain its value amid fluctuating forex turnover and changing investor sentiment.