….As Naira Gains At FX Markets
The Central Bank of Nigeria (CBN) has reported that Nigeria’s foreign reserves dropped from $39.72 billion as of the end of January this year to $38.42 billion in February, representing a $1.31 billion.
The latest FX reserves data published by the apex bank on its website, the decline recorded in February was more than the $1.16 billion drop in the preceding month, raising analysts’ concerns about Nigeria’s financial stability, especially in view of the country’s growing debt service obligations to external creditors as well as the import-dependent structure of the economy.
According to the figures, in the month under review Nigeria’s foreign reserves consistently dropped by the day, an analysis of the data showed that the reserves stood at $39.60 billion on February 3, representing a slight drop from the previous week’s $39.72 billion recorded at the end of January.
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On February 4, the reserves further dropped to $39.54 billion and by February 7, the reserves had dropped to $39.04 billion, and by February 10, the reserves further fell to $39.27 billion. By February 12, the value dipped to $39.15 billion and further dropped to $38.88 billion by February 17, ebbing to $38.72 billion on February 19 and $38.69 billion on February 21.
At the end of the month, the reserves settled at $38.41 billion, representing a 3.3% month-on-month depreciation in value.
The depreciation in the foreign reserves is coming at a time the local currency is rebounding in value at the foreign exchange (FX) market during the month.
Available data on the value of the Naira during the trading sessions at the FX markets showed that it appreciated in value when exchanged with the USD, British pound sterling, the Euro and other foreign currencies in February.
For instance, by the end of February, the naira traded at N1,540/$1, up from N1,620/$1 in January, reflecting a 7.41% appreciation.
Also, the local currency strengthened against the British pound sterling, trading at N1,910/£1 from N2,000/£1, marking a 4.50% increase, just as it appreciated against the Euro, exchanging at N1,550/€1, compared to N1,660/€1 in January, reflecting a 6.34% gain.
