The nation ’ s foreign exchange reserves have dropped to a five -month low of $ 43 .67 bn , losing $ 1 .23 bn in 29 days , latest data obtained from the Central Bank of Nigeria on Sunday showed .
The external reserves , which rose to a high of $ 45 .18 bn on June 10 , 2019 from $ 43 .17 bn on January 1 , dropped to $ 44 .90 bn on July 31 .
One of the core mandates of the CBN is to manage the forex reserves , which are assets held on reserve in foreign currencies .
As of August 29 , the reserves stood at $ 43 .67 bn , the lowest level since March 22 , according to CBN data .
The central bank receives foreign exchange inflows from crude oil sales and other sources of revenue on behalf of the Federal Government “ Such proceeds are purchased by the bank and the naira equivalent credited to the Federation account. These proceeds are shared each month , in accordance with the constitution and the existing revenue sharing formula . The monetised foreign exchange , thus , belongs to the CBN . It is from this portion of the reserves that the bank conducts its monetary policy and defends the value of the naira , ” the CBN said on its website .
The apex bank has recently moved to intensify restrictions on forex access for imports that were imposed in 2015 in a bid to conserve the nation ’s foreign reserves .
The CBN said in July that it had restricted the sale of forex for the importation of milk from the Nigerian forex market . Last month, President Muhammadu Buhari disclosed that he had directed the CBN to stop providing forex for importation of food into the country .
The price of crude oil , Nigeria’ s main foreign exchange earner , plummeted to its lowest point since the beginning of the year on August 7 as the United States -China trade war worries gripped the market
Brent crude, against which Nigeria ’s oil is priced , fell by $ 2 .60 to $ 56 .34 on August 7 , losing more than 20 per cent since hitting its 2019 peak in April . It stood at $59 . 25 per barrels as of 6 .00 pm Nigerian time .
The 2019 budget is based on oil production of 2. 3 million barrels per day ( including condensates ) with an oil benchmark price of $ 60 per barrel FSDH Research, an arm of FSDH Merchant Bank Limited, said in a recent report that the drop in crude oil prices might have negative impacts on revenue and other key prices in Nigeria , adding that the decrease in the external reserves might be attributed to lower crude oil prices and lower foreign portfolio investment inflows .
A global credit rating agency , Fitch Ratings , said in an August 22 , 2019 report , “ The competing goals of preserving naira stability and supporting Nigeria ’s fragile recovery are pushing the CBN towards increasingly complex policy measures , with a risk of aggravating external vulnerability or causing macroeconomic distortions.
“ We expect the CBN to continue to pursue a combination of tight liquidity management , segmented exchange -rate markets , and foreign- exchange interventions and restrictions . It will be aided by ample international reserves of more than six months of expected 2019 current account payments , and a small current account surplus conditional ( we estimate) on Brent prices averaging at least $60 a barrel .”
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