Nigeria’s external reserves dip 2.25% in one month despite oil price rise

Nigeria’s external reserves went in an inverse direction in relations to the price of oil in the last one month.

The country’s external reserves declined 2.25% to $34.13 billion on May 21, 2021, from $34.91 billion in the same period in the prior month, though oil price rose 1.71% to $66.44 per barrel during this period.

Africa’s largest economy is heavily dependent on crude oil export for its foreign exchange inflow, so much that a decline in oil price or output usually has an adverse impact on its economy.

The country’s oil output went up by 5.09% to 1.548 million barrel per day in April from 1.473 million barrel per day in March.

Despite this, Nigeria has continued to struggle with illiquidity in its forex market as the Central Bank of Nigeria (CBN) was forced to do way with the official exchange rate which it has been displaying on its website for many and adopted the Investors’ and Exporters’ forex rate for government transactions.

Mr Johnson Chukwu, Managing Director, Cowry Assets Management, told Businesslive.ng that with the adoption of Investors’ and Exporters’ forex rate by the CBN, it has come to term with the reality, as no business was being with the former official rate.

The dollar was sold for N410.25 at the Investors’ and Exporters’ on Monday as the apex bank struggles to clear the backlog of unmet demands.