Nigeria’s Foreign Reserves Fall To $1.2 Billion

According to figures from the Central Bank of Nigeria, Nigeria’s foreign reserves have lost $1.2 billion since December 31, 2021.

The reserves fell to $39.3 billion on May 6, down from $40.42 billion on December 31, 2021.

In the last four months and six days, the reserves have lost 2.98 percent of their worth.

Nigeria is currently dealing with the shocks of crude oil theft and subsidy payments, which the government claims are undermining the benefits of high crude oil prices supported by the Russia-Ukraine war.

Brent crude oil prices are at $104.2, while West Texas Intermediate is selling for $101.5. In March, prices had increased to more than $117 per barrel.

Nigeria’s economy is dependent on oil for more than 90% of its foreign exchange receipts, which analysts feel is unsustainable for a healthy currency.

The governor of the Central Bank of Nigeria, Godwin Emefiele, is currently counting on the Dangote Refinery to help the naira.

Emefiele also believes that limiting the use of dollars for commodity imports such as wheat would save the economy billions of dollars. Currently, over 42 goods are prohibited.

The bank introduced the R200 in February, a forex policy that would assist the government earn $200 billion in non-oil revenues over the following five years.

“With Dangote refinery coming up with the 650,000 barrel refinery, hopefully by the end of the year,” Emefiele said, “that will also hopefully reduce the demand for foreign exchange that would normally go for the importation of petroleum products.”

“I have often stated that the importation of refined products alone, whether rice, sugar, or wheat, consumes close to 40% of the foreign exchange required to fund imports in Nigeria.”

“If we find ourselves in a situation where we no longer need foreign exchange to import petroleum products by the end of this year, I believe demand will fall.” As demand falls, whatever supply is available to meet demand will result in a stable exchange rate.”