Naira and Dollar

Adebayo Obajemu

Report has indicated that Nigeria’s external reserve fell by $261 million in 15 days as the Central Bank has marginally increased sale of forex in the I&E window.

Figures gleaned from the website of the Central Bank reveals Nigeria’s external reserve is now $36.3 billion as at June 18th 2020.

As at June 3rd, the external reserve was $36.57 billion. The dip is in line with expectations considering the limited dollar earnings due to stiff OPEC cuts and low crude oil prices.

Nigeria’s external reserve has declined for a second consecutive week since June 3, 2020, when it stood at $36.577 billion. This represents a decline of $261 million or 0.71% in 15 days when compared to the $36.316 billion as of June 18, 2020.

Also, note that Nigeria’s external reserve position is now down $9 billion years to date and down from its peak of $45.17 billion achieved.

The naira has been under pressure against other major currencies, particularly the dollar, since the fall in oil prices and the outbreak of the COVID-19 pandemic. This has triggered a wave of currency speculators who believe the devaluation which occurred in March should be have been more. The CBN devalued it’s the official exchange rate in March from N307/$1 reacting to the fall in crude oil prices. However, Brent crude oil prices have risen since then to over $43 per barrel but yet to hit pre-crash level prices. Speculators are betting that the government may devalue further if they are to fund the government’s huge revenue gap.