Nigeria’s foreign reserves fell by $2.3 billion in the first six months of 2021, despite an increase in oil prices, as foreign exchange pressure and subsidy negated the gains.
The decline in the external reserves is in spite of the steady increase in the price of crude oil, which accounts for about 70 per cent of the nation’s dollar earnings.
According to data obtained from the Central Bank of Nigeria (CBN) the reserves began the year 2021 with $35.65 billion and ended at $33.32 billion on June 30, 2021.
The first three months of 2021 saw a reduction of $827.3 million to $34.82 billion as of March 31, and then a drop of $1.52 billion in the second three months of 2021.
In January, the reserves grew by nearly $1 billion, starting at $35.64 billion and ending at N36.30 billion.
The gains were thereafter eroded in February as reserves dropped by $1.1billion, falling from $36.19billion as of February 1 to $35.09billion on February 26.
The reserves lost another $178 million in March, falling from $34.99 billion at the end of March 1 to $34.82 billion at the end of March 31.
In April, however, the reserves increased by $35.8 million, rising from $34.84 billion on April 1 to $34.88 billion at the end of the month.
In May, external reserves fell again, from $34.78 billion on May 4 to $34.22 billion on May 31. This is a $557.5 million loss.
Also in the month of June, external reserves dropped by $884.5 million. The reserves stood at $34.20 billion on June 1 closing at $33.32 billion on June 30.
Reacting, analyst at Financial Derivatives Company Limited have projected further decline in the reserves.
According to FDC the expected downward trend is due to increased dollar sales to banks by the CBN in its bid to clear the backlog of dollar demand by Foreign Portfolio Investors (FPIs).
They stated: “We expect the external reserves to decline further towards $33 billion in the near term due to the lingering backlog of unmet forex demand. However, higher oil prices will slow the pace of depletion of the external reserves.”
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
If you are motivated and passionate about building a global society, founded on justice, equity, fairness, transparency, accountability and superior knowledge, kindly consider donating to Ripples Nigeria’s solutions journalism.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
INVESTIGATION: Inside UNILAG’s multi-million naira budgetary abuse and academic discord
The University of Lagos located in Nigeria’s commercial capital, Lagos, has been embroiled in controversies with allegations bothering on misappropriation of...
SPECIAL REPORT: Displaced residents of Zamfara battle hunger, as underfunding derails Nigeria’s nutrition goals
On paper, Muhammad Zayyanu is seven years old. The quiet boy who looks shorter for his age could not recollect...
INVESTIGATION: N7.3bn paid for unnamed projects; how Nigerian govt spent N2.2trn in six months
Analysing nearly 3,000 payments made by various Federal Government Ministries, Departments and Agencies (MDAs) over the previous six months (January...
INVESTIGATION… Delay rocks Nigerian govt’s promise of N30,000 covid-19 relief for artisans, others
Before the outbreak of the COVID-19 pandemic in February, 2020, Chukwudi Okoroigwe’s daily earnings as a bus driver was hardly enough to cater to the...
INVESTIGATION… Ten years after, communities count losses as AfDB, Cross River govt abandon road project
Ten years after the Cross River State government and African Development Bank (AFDB) jointly awarded the Yahe-Wanokom-Wanikade-Benue border road for...