The decline in foreign reserves comes amidst over $100 crude oil average price in August; against a benchmark of $62 per barrel set by the Federal Government for the N17.12trillion 2022 budget.
Despite the rise in oil prices, Nigeria’s ability to raise its oil profits by declining oil production, which accounts for the majority of the country’s foreign exchange reserves.
Nigeria’s naira-to-dollar exchange rate has dramatically decreased from N565/$1 to N700/$1, a difference of N135 over the past year. However, the official currency rate has remained steady and is now trading at about N430/$.
However, when the central bank sells foreign currency through the official window from its external reserves. The reserve decline can be link to CBN’s ongoing intervention in the official FX market to limit exchange rate volatility.