Nigeria’s Foreign Reserve Drops As CBN Provides Explanation

Nigeria's External Reserves Reduces by $427m In One Month- CBN
Nigeria's External Reserves Reduces by $427m In One Month- CBN

Nigeria’s external reserve has dropped to a seven-month low as exporters, politicians and others tightened their grip on dollars.

According to data obtained from the CBN website, Naira fell to $38.57 billion as of May 25, 2022. The last time it was at this level was in late October 2020.

The drop in Nigeria’s reserves will make defending the Naira from further devaluation more difficult.

Already, many banks are extending the waiting period to access forex for foreign trips, thereby denying travellers with urgent trips access to apply for Personal Travel Allowance or the Business Travel Allowance requests and this is fueling demand at the black market.

Brand Spur Nigeria recalls that Ripples Nigeria reported that one of the banks in a note to its customers said, “All requests are reviewed to ensure that they meet regulatory requirements.

“In addition, due to limited forex availability provided by the Central Bank of Nigeria, we require a 30-day period to fulfil requests for school fees, upkeep and rent payment.”

In his explanation on Nigeria’s dwindling reserves despite international oil prices trading above N100 per barrel Godwin Emefiele, the CBN Governor blamed the high cost of importation.

Emefiele noted this at the last Monetary Policy Committee meeting held last week.

His words, “Nigeria’s dwindling foreign reserves can be attributed to the weak accretion to the reserves from exports and the high cost of importation of refined petroleum products.”