Nigeria's External Reserves fall by $915m after Naira float

Nigeria's external reserves have experienced a decline of $915 million following the Central Bank of Nigeria's official floatation of the naira and the liberalization of the foreign exchange market.
Nigeria's Naira notes
Nigeria's Naira notes Google photos

Data from the CBN, obtained on Sunday, indicated that the reserves, which were at $34.66 billion as of June 14, 2023, when the naira was floated, have now decreased to $33.74 billion as of August 24, 2023.

Before the naira float, the value of the naira stood at 471.67/$ at the Investor & Exporter forex window on June 13. However, after the floatation, the local currency plummeted to over 700/$ at the I&E window and has continued to trade at over 700/dollar ever since.

At the parallel market, the naira was being bought and sold for 900/$ and 915/$ on Saturday. Meanwhile, Pounds Sterling was bought and sold at N1160 and N1180 respectively, according to statements from Bureau de Change operators.

The I&E window recorded the naira beginning trading on Friday at 773.29/$, reaching a peak of 799.9/$, and ultimately closing at 778.42/$.

During the most recent Monetary Policy Committee meeting, the acting Governor of the CBN, Mr Folashodun Shonubi, acknowledged the weak accretion to external reserves and the persistent demand pressure on foreign exchange.

He emphasized the bank's commitment to safeguarding the naira from further decline and pledged to crackdown on illegal Bureau de Change operators.

The Nigerian National Petroleum Corporation also revealed its intention to secure a $3 billion loan from the Africa Import and Export Bank, aiming to temporarily bolster dollar supply in the country.

Aminu Gwadabe, the President of the Association of Bureau De Change Operators of Nigeria, highlighted the CBN's intent to take strict action against illicit operators in their pursuit to stabilize the naira. He mentioned that the CBN had reiterated its stance during a sensitization engagement, warning that any breaches beyond allowable margins by August 31, 2023, could lead to the revocation of operating licenses.

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