Foreign reserves drop by $547.9m in 2 months
By Kayode Tokede
The Central Bank of Nigeria (CBN) has disclosed the country’s foreign reserves dropped by $547.9million in first two months of 2021.
The foreign reserves have been on consciously decline steady in global oil price, according to Organization of Petroleum Exporting Countries (OPEC).
Nigerian NewsDirect gathered from the apex bank website that the foreign reserves dropped to $35.09 billion as at February 26, 2021 from $35.65billion it opened in 2021.
However, the foreign reserves in January gained $655.29million or 1.84per cent to $36.3 billion as reflected in the improvements in crude oil prices, partial global economic recovery amid optimism over the discovery and distribution of COVID-19 vaccines by most developed economies.
In February, the foreign exchange buffer dropped by $1.1billion or 3.03 per cent to from $36.3 billion to $35.09 billion as at February 26, 2021.
Our correspondent gathered that the OPEC basket of 13 crudes gained 28.13 per cent to $64.37 per barrel from $50.24 it closed in 2020.
The Central Bank Governor, Godwin Emefiele, had recently said foreign reserves at $35billion was sufficient to finance the country’s seven months’ imports.
Emefiele in his personal speech at the end of January Monetary Policy Meeting (MPC) said efforts were being made to conserve the country’s foreign exchange.
He said, “With the decline in our foreign exchange earnings and subsequent adjustments in the value of the naira vis-à-vis the US dollar, the CBN has continued to implement a demand management framework, which is designed to support improved production of items that can be produced in Nigeria, and further conservation of our external reserves.
“These measures have helped to prevent a significant decline in our reserves.
“Our external reserves currently stand at over $35billion and is sufficient to cover more than seven months of import of goods and services, even though the international rule of thumb is for reserves to cover about three months of imports.”
He said strong emphasis must be placed on diversifying the foreign exchange earnings, as this would help to limit the impact of low crude oil prices on the Nigerian economy.
“The CBN in this regard would be deploying part of its intervention schemes towards supporting growth in the country’s non-oil exports, along with measures to improve the flow of remittances through formal channels,” he said.
According to him, these measures will help to provide sustainable flows of foreign exchange to meet the needs of the Nigerian economy, while supporting job creation efforts.
He also emphasised the primacy of containing inflation, as price stability was critical in guiding savings and investment decisions by households and businesses.
Due to the unprecedented situation that the country faced in 2020, and the need to limit the scars that a prolonged recovery could have on its growth prospects as a nation, he said he was inclined to support measures that would enable greater recovery of the economy.
