Nigeria’s foreign exchange reserves dipped by $342.97m to $36.53bn in nine days, data from the Central Bank of Nigeria on Sunday showed.
The decline in the country’s foreign exchange reserves comes amid the recent sale of $876.26m to meet demands from importers and other users through the Retail Dutch Auction System.
It also precedes the Nigerian government’s move to issue a $500m domestic dollar bond.
Last week, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the $500m domestic dollar bond would enhance external reserves and help stabilise the foreign exchange situation in the country.
He said, “This historic issuance will provide essential foreign exchange liquidity and boost reserves, which will help stabilise 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.”
He further stressed that the bond was a strategic move to channel funds into sectors that would catalyse economic growth in the country.
The government plans to issue its dollar-denominated domestic bond on Monday, as it hopes to raise $500m from local and foreign investors.
This dollar bond is the first of its kind in the country, with the bond offering bullet repayment at maturity in US dollars and full repayment of the principal amount at the end of the five-year term.
Investors can subscribe with a minimum amount of $10,000, with additional investments in multiples of $1,000 thereafter.
This move is expected to attract local and foreign investors and provide much-needed support to the external reserves.
As of August 15, 2024, the reserves stood at $36.53bn, down by approximately 0.93 per cent from $36.87bn recorded on August 7, 2024.
On August 7, 2024, the reserves were recorded at $36.87bn. Over the next few days, the reserves steadily decreased, with August 8 showing a slight dip to $36.84 billion, marking a decline of approximately 0.06 per cent.
By August 9, the reserves had further diminished to $36.83 billion, representing a more modest daily decline of 0.05 per cent.
The decline became more pronounced over the following days, with August 12 witnessing a drop to $36.62bn, a decrease of 0.57 per cent from the reserves recorded three days earlier.
This was followed by another decline on August 13, when reserves stood at $36.57bn, reflecting a further 0.14 per cent reduction.
By August 14, the reserves had decreased slightly to $36.54bn, showing a minimal drop of 0.02 per cent, highlighting the continued strain on the reserves.
The period culminated on August 15, 2024, with reserves hitting $36.53bn, a total decline of 0.26 per cent from the previous day and marking a cumulative decrease of 0.93 per cent over the nine days.
This persistent decline comes after four months of about $4bn growth in the external reserves.
It further highlights the struggle faced by Nigeria’s financial authorities in maintaining reserve levels amid ongoing economic pressures, including the need to meet import demands and debt obligations, as well as manage liquidity for the naira’s stability.
At last month’s Monetary Policy meeting, the CBN governor announced that the external reserves were $37.05bn but this was confirmed to be inaccurate.
He said at the meeting, “As of July 18, 2024, external reserves stood at US$37.05bn, compared with US$34.70bn as of June 2024. This represents 11 months of import cover for goods and services.”
However, checks by our correspondent showed that the external reserves as of that date were $35.93bn, $1.12bn short of the amount announced to the public by the governor.
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