The external reserves of Africa’s largest economy recorded a drop to the tune of about $77.23m or 0.23 per cent in December 2023 due to the lingering foreign exchange instability in the country.
As of December 28, 2023, according to figures obtained from the Central Bank of Nigeria, Nigeria’s external reserves also known as foreign reserves, stood at $32,892,386,111. The liquid portion was $32,164,718,095 while $727,668,016 was not available for use (blocked).
At the beginning of the last month of the year 2023, the external reserves figure was close to $33bn at ($32,969,611,433) with $32,212,850,183 available for use while 756,761,250 was blocked.
The nation’s foreign reserves stood at $33,004,054,737 as of November 30, 2023.
Foreign exchange reserves are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and maintain confidence in financial markets.
The country’s monetary policy managers have failed in their quest to grow and sustain foreign reserves over time.
Nigeria’s foreign reserves rose to about $47.37 billion as of April 5, 2018, but had recorded a sustainable decline in the past five years.
The former CBN Governor, Godwin Emefiele, had set a target of $50 billion before the end of 2018, but that aspiration has not materialized.
Fitch Ratings on September 6, 2023, said, ‘’Nigeria’s weaker net international reserve position, emphasises the sovereign’s external vulnerabilities. Exchange-rate liberalisation and improvements in the overall monetary policy framework could strengthen the sovereign’s credit profile by easing foreign-currency supply constraints, but a recent loss of reform momentum and the constrained reserve position highlight the significant challenges such policy adjustments face.
‘’When we affirmed Nigeria’s rating at ‘B-’ with a Stable Outlook in May, we stated that external finances were a key rating sensitivity. We estimated that around 30% of Nigeria’s gross reserves (which were USD37 billion at end-2022) comprised swaps with domestic banks, although we considered that some other reserves could well be encumbered.’’
Meanwhile, the government through the CBN had made efforts to stabilize the nation’s external reserves by boosting the forex supply in the system.
