Nigeria’s external reserve has fallen to $37.17 billion as of 15th of November 2022.
This was confirmed from the Central Bank of Nigeria (CBN) data.
This is also the lowest level of the external reserves this year and the lowest level since September 30th, 2021 when the country faced a barrage of currency depreciation.
Nigeria is still facing massive currency volatility that has seen the exchange rate between the naira and dollar oscillate between gains and losses. Even so, the disparity between black market rates and the official exchange continues to widen.
The exchange rate has lost a whopping $1.8 billion in net outflows since September 1st, 2022 when it was just around $39 billion.
The drop in external reserve is surprising when you consider that data from the Bureau of Statistics recently confirmed capital importation was up 98% year on year.
The increase recorded was due to the 120.8% surge recorded in the country’s portfolio investment. Foreign portfolio investments in the review period increased from $551.37 recorded in Q2 2021 to $1.2 billion.
This suggests some of the capital inflows may have also exited the country as is typical with portfolio inflows.
Nigeria’s external reserves are largely funded from export proceeds from the sale of oil and gas to other countries.
However, rising cases of crude oil theft have dented a blow on Nigeria’s export potential and thereafter the country’s external reserves.
Nigeria’s external reserves are also funded from foreign currency loans such as multilateral loans from the likes of the World Bank or IMF or from the sale of Eurobonds.
However, Nigeria has not tapped the Eurobond market in over a year meaning the central bank has had to rely mainly on crude oil sales.
Analysts argued that the drop in external reserves is likely due to the central bank’s defense of the naira in recent weeks.
