External Reserves dips by $77 Million in December

The external reserves of Africa's largest economy experienced a decline of approximately $77.23 million or 0.23 per cent in December 2023 due to ongoing foreign exchange instability in the Nigeria.

As of December 28, 2023, figures from the Central Bank of Nigeria revealed that Nigeria's external reserves, also known as foreign reserves, were at $32,892,386,111. The liquid portion amounted to $32,164,718,095, while $727,668,016 was unavailable for use (blocked).

At the beginning of the last month of 2023, the external reserves were close to $33 billion ($32,969,611,433), with $32,212,850,183 available for use and $756,761,250 blocked. The nation's foreign reserves stood at $33,004,054,737 as of November 30, 2023.

Foreign exchange reserves, including cash and other assets like gold, held by a central bank or monetary authority, play a crucial role in balancing a country's payments, influencing its currency's foreign exchange rate, and maintaining confidence in financial markets.

Despite the efforts of the country's monetary policy managers, there has been a persistent inability to grow and sustain foreign reserves over time. Nigeria's foreign reserves, which had reached about $47.37 billion as of April 5, 2018, have witnessed a continuous decline in the past five years.

Former CBN Governor Godwin Emefiele had set an ambitious target of reaching $50 billion by the end of 2018, a goal that has yet to materialize.

Fitch Ratings said,  ‘’Nigeria’s weaker net international reserve position, emphasizes the sovereign’s external vulnerabilities.  Exchange-rate liberalization and improvements in the overall monetary policy framework could strengthen the sovereign’s credit profile by easing foreign-currency supply constraints, but a recent loss of reform momentum and the constrained reserve position highlight the significant challenges such policy adjustments face.

‘’When we affirmed Nigeria’s rating at ‘B-’ with a Stable Outlook in May, we stated that external finances were a key rating sensitivity. We estimated that around 30% of Nigeria’s gross reserves (which were USD37 billion at end-2022) comprised swaps with domestic banks, although we considered that some other reserves could well be encumbered.’’

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