Nigeria’s foreign reserves is now on a steady decline against the backdrop of the decision by Central Bank of Nigeria, CBN, to protect the Naira from depreciation.
Looking back at the last trading day on Wednesday, September 23, the reserves had fallen to $30.485 billion, about $1.139 billion drop from this year’s peak of $31.624 billion recorded about six weeks ago, August 9.
The dwindling trend, according to financial sector analysts, is a result of CBN’s operations in the foreign exchange market, where it tries to meet demands at a predetermined exchange rate amidst crumbling oil revenue.
Foreign exchange market reports still shows continued excess demand which has continued to put pressure on exchange rate, while premium on parallel market continue to expand.
Financial analysts have also attributed the outflows to recent announcement by USA investment banker, JP Morgan, that it was withdrawing Nigeria from its Government Bond Index for Emerging Markets, GBI-EM.
