Nigeria’s forex buffer declines further, down to $36.16 bln by July 2 ~CBN
Nigeria’s foreign exchange reserves fell 1.12 percent to $36.16 billion by July 2, the Central Bank of Nigeria (CBN) said in the latest posting on its website, continue the decline since June 4.
The nation’s forex buffer had peaked at $36.59 billion by May 29, after the inflows of dollars from money recovered from Late Sani Abacha loots and credit facilities from the International Monetary Fund (IMF).
However, the reserves started a gradual decline after the CBN reopened the domestic foreign exchange markets to finance major supplies in the economy.
The reserves stood at $36.57 billion by June 3, a month ago while the figure for July 2, was lower than $38.53 billion at the starts of the year.
The buffer has declined more than six percent year-to-date, according to data from the regulatory bank and the country face dollar shortage in the wake of the outbreak of covid-19 and the sharp drop in crude oil prices.
In April, the IMF approved and disbursed $3.4 billion in emergency financial assistance under the Rapid Financing Instrument (RFI) to support the authorities’ efforts in addressing the severe economic impact of the COVID-19 shock and the sharp fall in oil prices.
Also, in May Nigeria received $312 million recovered loot by the late military doctor Abacha from the United States and Jersey Island, beefing up the country’s forex reserves.
Analysts said the decline in the country’s foreign exchange buffer are signs of fresh pressure on the local currency as the economy gradually reopens after more than two months of lockdown to curtail the spread of coronavirus pandemic.
The backlog of demand from offshore portfolio investors, who had sold down their holdings in the debt and equity markets has peaked stood around $1.5 billion, but the CBN said many of them may have to wait for the country to finance essential sectors in a bid to steer the country away from recession.