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Nigeria’s foreign exchange reserves have decreased by $342.97 million, dropping to $36.53 billion over a span of nine days, according to data released by the Central Bank of Nigeria (CBN) on Sunday. This decline follows a recent sale of $876.26 million through the Retail Dutch Auction System to meet the demands of importers and other foreign exchange users.
The decline in reserves comes ahead of the Nigerian government’s plan to issue a $500 million domestic dollar bond. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, emphasized that this bond issuance is a strategic move to enhance Nigeria’s external reserves and stabilize the foreign exchange situation.
Edun stated, “This historic issuance will provide essential foreign exchange liquidity and boost reserves, which will help stabilize the exchange rate, manage inflation, and eventually lower interest rates. It will also lay the foundation for increased investment by both domestic and foreign direct investors.”
The government is set to issue this dollar-denominated domestic bond on Monday, targeting $500 million from local and foreign investors. The bond, the first of its kind in Nigeria, offers bullet repayment at maturity in US dollars, with full principal repayment at the end of its five-year term. Investors can subscribe with a minimum of $10,000, with additional investments allowed in multiples of $1,000.
This move is expected to attract significant interest from investors and provide much-needed support to Nigeria’s external reserves.
As of August 15, 2024, the reserves stood at $36.53 billion, representing a 0.93% decline from the $36.87 billion recorded on August 7, 2024. The reserves saw a gradual decrease over the nine-day period, with small daily declines becoming more pronounced as the days passed.
On August 7, 2024, reserves were recorded at $36.87 billion. By August 8, they dipped slightly to $36.84 billion, a 0.06% decline. The reserves continued to diminish, reaching $36.83 billion by August 9, reflecting a 0.05% daily decrease.
The most significant drop occurred between August 12 and August 13, when reserves fell from $36.62 billion to $36.57 billion, a 0.14% reduction. By August 14, the reserves had slightly decreased to $36.54 billion, marking a minimal 0.02% drop, before settling at $36.53 billion on August 15, 2024.
This nine-day decline follows a four-month period during which Nigeria’s external reserves grew by approximately $4 billion. The current trend underscores the challenges faced by Nigeria’s financial authorities in maintaining reserve levels amid ongoing economic pressures, including import demands, debt obligations, and the need to manage liquidity for naira stability.
At last month’s Monetary Policy meeting, the CBN governor reported that the external reserves were $37.05 billion as of July 18, 2024. However, further checks revealed that the actual figure was $35.93 billion, $1.12 billion less than what was publicly announced.
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