External Reserves Rise by 3.6 Per Cent, CBN Changes Official Exchange Rates Twice in a Week
- Nigeria’s external reserve rose by 3.6 per cent in January to $33.35 billion
- The rise was attributed to the rise in crude oil prices and increased oil production by the Nigerian government
- The development came amid a 61% decline in the value of the naira following CBN’s actions
Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.
Nigeria’s external reserves, which indicate the future of the exchange rate of the naira, increased by 3.6% to $33.35 billion in January 224 to reverse a five-month drop which started in August 2023.
According to data from CBN, the external reserves increased to $33.35 billion on January 30, 2024, from $32.192 billion in December last year.
Source: Getty Images
An increase in oil price causes a rise in external reserves
The development sharply contrasts with the decline recorded in the reserves in 2023. The reserves dropped through 2023, except for a marginal increase in October last year.
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The nation’s external reserves closed in 2024 at $32.192 billion, a 13.2% or $4.89 billion loss from $37.082 billion recorded at the end of 2022.
The rise in external reserves, which shows an improvement in the foreign exchange inflow during the month, may be unconnected with the rise in the price of Nigeria’s crude oil to $84.41 per barrel at the end of January from $79.4 per barrel at the end of December and the increase in Nigeria’s oil production in the second half of 2023.
Naira witnesses near convergence in forex markets
In contrast, the volume of dollars traded in the Nigerian Forex market dropped by 3.2% every month to $2.14 billion in January 2024 from $2.21 billion in December.
An analysis of the weekly transactions at NAFEM shows a steady flow and decline throughout January.
The Nigerian currency, the naira, depreciated to its lowest last week following a 61% weekly depreciation to N1,435.53 per dollar in the official market due to new measures by CBN.
Vanguard reports that the naira lost 2.9% of its value in the parallel market, reducing the gap between the official and similar exchange rates to N4.35 per dollar from N508.1 experienced the previous week.
Analysts said the Central Bank of Nigeria decided to tackle illegality in the foreign exchange market with circulars directing banks to display accurate forex transactions.
CBN changes official naira to dollar exchange rate
Legit.ng reported that the Central Bank of Nigeria (CBN) has readjusted the official exchange rate on the Customs platform, the second review in less than 24 hours.
Data obtained from the federal government trading portal shows that from Monday, February 5, 2023, importers will now pay N1,413.62/$1.
This is an increase from N1,356.883/$1 on Friday, February 2nd, 2023, and the previous rate of N951.941/$1 on Thursday, February 1, 2023.
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