The nation’s foreign reserves rose by $295.12m to $45.087bn as of May 27 from $44.792bn on April 26, the latest statistics from the Central Bank of Nigeria revealed. The reserves, which rose from $43.041bn on December 17, 2018, to $43.047bn as of January 9, 2019, also maintained a steady rise from $42.87bn on March 12 to $44.728bn as of April 12.
The CBN Governor, Godwin Emefiele, said the introduction of the Investors & Exporters window, along with improvement in domestic production of goods, helped shore up the country’s external reserves.
He said, “Transactions have reached over $48bn since the inception of the window and our foreign exchange reserves have risen to $45bn in April 2019 from $23bn in October 2016. Nigeria’s current stock of external reserves is now able to finance over nine months of current import commitments.
“With improved availability of foreign exchange, the exchange rate at the I&E FX window has remained stable over the past 24 months at an average of N360/$, and the parallel market exchange rate has appreciated from N525/$ in February 2017 to N360/US$ today.” Emefiele recalled that in October 2014, the US Federal Reserve commenced the tapering of its quantitative easing programme towards a more conventional monetary tightening cycle.
He said the decision led to acute capital flow reversals, especially from emerging markets and heightened financial fragilities in the countries. According to him, the most important of the factors to impact the Nigerian economy was the plunge in crude oil price. He said that Nigeria’s overdependence on crude oil for over 60 per cent of fiscal revenue and over 90 per cent of forex inflows, meant that shocks in the oil market were transmitted entirely to the economy via the forex markets as manufacturers and traders who required forex for input purchases were faced with dwindling supplies.
He said, “Average monthly inflows of forex into the CBN fell from over $3.4bn in June 2014 to a low of $1.4bn in September 2016. The decline in forex earnings was further complicated by the foreign capital flow reversals due to rising yields in the USA. The impact of these on our economy was evident in the rising pressure on the Naira-Dollar exchange rate.”
In a bid to contain rising inflation and to cushion the impact of the drop in forex supply on the Nigerian economy, he said the monetary and fiscal authorities took extraordinary measures to tackle these extraordinary challenges.