Nigeria’s foreign exchange reserves have fallen by $1.8bn in 10 weeks, according to data from the Central Bank of Nigeria.

As of May 29, 2024, the country’s FX reserves were $32.69bn, down from $34.44bn as of March 18. This decline signifies a drop from the $36.1bn recorded in May 2023.

The reserves have been declining steadily over the past few months, with a total decrease of $3.4bn since February 2024.

Experts believe that the decline in FX reserves is attributed to a combination of factors, including debt repayment, a significant decline in oil exports, a decrease in foreign investment, and a rise in imports.

Debt repayment recorded by the apex bank as of January 2024 was $560m, it reduced to $283.29m in February and then $276.16m in March 2024. Experts claim that the apex bank must have been servicing the foreign debts from the external reserves.

In May, the naira ended the month weaker, despite a surge in dollar supply amounting to $4.60 billion in the official foreign exchange market.

The FX market closed for the month on Friday with the naira losing 5.60per cent as the dollar was quoted at N1,485.99, weaker than N1,402.67 quoted at the beginning of the month, according to data from the FMDQ Securities Exchange Limited.

The foreign exchange market closed for May 2024, with the dollar selling for N1,470, weaker than N1,380 quoted at the beginning of the month.

The currency’s performance this week reflects a significant struggle to maintain its value amidst fluctuating forex turnover and investor sentiment.

Nigeria’s economy is heavily reliant on oil exports, which account for over 90 per cent of its foreign exchange earnings.

Financial experts noted that the decline in FX reserves had led to a weakening of the naira, Nigeria’s currency, which has been struggling against the US dollar.

The naira has lost over 50 per cent of its value against the dollar since the beginning of 2024, making it one of the worst-performing currencies in Africa.

Punch