Nigeria’s external forex reserves rise 2.35% YTD to $36.48 billion ~CBN
By Samuel Bankole
Nigeria’s external reserves rose 2.35 percent year-to-date to $36.48 billion by January 20, 2021, the latest data from the Central Bank of Nigeria (CBN) showed.
The country’s foreign exchange buffer closed at $35.37 billion by December 31, 2020, and opened on January 4 at $35.64 billion.
The forex reserves were negatively impacted for the better part of last year due to the sharp drop in dollar earnings by the country as the outbreak of Covid-19 disrupted the global supply chain and hit demand for crude oil Nigeria’s mainstay.
This growth in the reserves this year signals a positive development which is expected to provide the needed support for the local currency.
As a result of the lack of enough accretion to the foreign reserves last year, the local currency depreciated badly on all the segments of the forex markets with the CBN resorting to adjustment of the exchange rate thrice in the year to curb speculations and reduce pressure on the available dollar.
The regulatory bank also resorted to rationing the dollar to importers at the domestic forex market in a bid to conserve the forex reserves.
Fitch Rating has however projected higher forex exchange buffer this year, basing its projection on possible stability in the global oil prices.
The global rating agency said that Nigeria’s foreign reserves would rise to $42 billion by the end of 2021.
The credit rating agency said it expects Brent crude to average $53 per barrel, compared to the $43.1 per barrel recorded in 2020, helping the country to accrue more dollar reserves.