By Samuel Bankole
The Central Bank of Nigeria (CBN) sold a total of $1.47 billion on the foreign exchange market in January, down 47.4 percent from the amount sold in December 2020, the bank said in a report on Monday.
Nigeria has continued to experience dollar shortage in the face of sharp drop in earnings from crude oil despite recovery in global oil prices.
Analysts said currency restrictions aimed at easing pressure on the local currency amid a shortage of dollars have contributed to galloping inflation and further weakened the naira in recent years.
According to the CBN report, dollar sales at the Investors and exporters’ window (I&E) dropped 79.9 percent, while sales on SMIS and SME declined 38.3 and 19.8 percent in January respectively.
“Similarly, foreign exchange cash sales to BDC operators
and matured swap transactions fell by 19.3 percent and 48.7 percent, compared with its level in the preceding month to $0.42 billion and $0.12 billion, respectively, in the review period,” the CBN stated.
The report stated that trading activities and capital inflow to Nigeria remained below the pre-pandemic levels in January.
Aggregate external trade at $8.14 billion, showed a month-on-month increase of 3.2 percent, from $7.89 billion recorded in December 2020.
When compared with the corresponding period of 2020, it indicated a 27.5 percent decline. Aggregate exports declined by 9.2 percent to $2.81 billion in the review period, compared with $3.10 billion in December 2020, due, largely, to decline in crude oil and gas export receipts.
Merchandise imports, however, increased to US$5.33 billion in January 2021, from US$4.79 billion in December 2020, as domestic demand improved in the review period.
A higher trade deficit of $2.51 billion was recorded in January 2021, relative to $1.69 billion in December 2020.
However, the CBN report stated that the outlook for the external sector position remains stable, while external reserves are expected to maintain a steady accretion in the coming
months, “due to the likely increase in oil price, the recent exchange rate management policies put in place by the CBN, partial global economic recovery, and the optimism over the roll-out of the COVID19 vaccines.”
The downside, the regulatory bank said is the prevailing upsurge in COVID-19 cases along with domestic inflationary pressures and speculative activities in the foreign exchange markets, which could reduce the inflow of private capital needed to finance the rising debt levels.