Nigeria faces economic challenges as its foreign reserves take a hit, dropping by $1.65 billion in the past six months. Data from the Central Bank of Nigeria (CBN) reveals that the country’s gross forex reserves, which were at $34.62 billion on June 15, 2023, have now decreased to $32.97 billion as of December 1, 2023. This decline follows the CBN’s decision to devalue the naira on June 14, 2023.
The drop in reserves is linked to the CBN’s effort to unify forex rates by instructing commercial banks to eliminate rate caps on the naira at the official Investors and Exporters (I&E) window. The circular from the apex bank collapsed all forex segments into the I&E window, except for specific applications such as medicals, school fees, BTA/PTA, and SMEs, which continue to be processed through commercial banks.
The naira’s value has consequently depreciated, and the decline in foreign reserves is considered a contributing factor. The depreciation is seen as problematic for Nigeria, affecting its ability to earn forex from both oil and non-oil exports.
The bank also said it has set up foreign exchange mechanisms to address FX issues. The governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, disclosed this on Friday, November 24, 2023, at the bankers’ dinner in Lagos. The apex bank governor said there had been an improved Forex market liquidity in recent weeks as the market responded positively to part payments made to about 31 banks to clear the backlogs of forward obligations. “No More N927/$”: New CBN action Inspires naira’s Recovery in the Official Market. Reports has it that the Naira appreciated against the US dollar on Monday, December 4, 2023, closing at N837.77 per dollar in the official market.