Nigeria’s international reserves, which opened at $38.100bn in January, 2020 may face further decline before the end of the year as the country confronts an expert revenue crisis triggered by impact of the coronavirus on receipts from sales of oil.
According to a report by the Central Bank of Nigeria (CBN), it says the reserves may further drop to between $$29.9 billion and $34 billion as more pressure piles on the reserve, and a further drop in the prices of crude, Nigeria’s biggest foreign exchange earner.
The apex bank in its latest Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2020/2021 reveals that the degree of external reserves accumulation is expected to decelerate, as outflows are expected to outweigh inflows.
“As a result, external reserves are expected to lie between $29.9 billion and $34.3 billion at end-December 2020 (predicated on current declining oil price between $20 and $40).”
Nigeria’s foreign reserves had been fast depleting from January till April, when it touched a year-to-date low of $33.440 billion in April before a $3.4 billion credit from the International Monetary Fund came along that helped it bottom out, after falling without cease for at least eight consecutive months.
It climbed marginally by $58.464 million or 0.16 per cent to $35.724 billion by 29th September, having risen from $35.665 billion a month before.
“This development, in addition to exchange market pressures, emanating from speculative activities in the BDC and I & E segments of foreign exchange market, is expected to exert pressure on the naira exchange rate.
“In addition, increased risk aversion behaviour by investors may negatively impact on capital inflow, as they flee to safe-haven assets,” the CBN report added.
The reserves hit a six-year peak at the beginning of January 2019 at $43.075 billion, a milestone yet to be bettered since that point.