Nigeria FX reserve dips by nearly $2M

[Marvelockg]

Nigeria’s foreign exchange (FX) reserves have witnessed a significant downturn, plunging by approximately $1.84 billion in 26 days, amidst the Central Bank of Nigeria’s (CBN) robust efforts to stabilise the naira, the FX reserves are now positioned at $32.29 billion declining from it previous record of $34.45 billion on April 21.

The likely cause of the increase is probably due to FG selling of dollar more aggressively which has led to the reduction in reserve level. Also, the recent payment of Eurobonds and other international financial obligations has also contributed to further draining of the reserves. Nigeria has also been grappling with low oil production levels, largely due to infrastructure challenges, oil theft, and vandalism. These issues significantly reduce the country’s primary source of foreign exchange revenue

The depletion of FX reserves is a cause for concern as it reflects the state of the country’s balance of payments and its ability to meet international obligations. The effect of a decline in fx reserve can lead to the following

1. A significant decline in the reserves can affect investor confidence and may lead to a credit rating downgrade, which can further impact the nation’s borrowing costs.

2. The decrease in reserves may also limit the CBN’s ability to intervene in the currency market, potentially leading to further depreciation of the naira.

. 
Is this something to be worried about? I have had my fears that whatever policies that the FG is putting in place that has led to the appreciation of the naira might just be a temporary solution that might hit us bad in the long run.

What's your view on this?
 
Source: nairametrics official site. https://nairametrics.com/2024/04/16/nigerias-fx-reserves-dip-by-over-2-billion-in-less-than-one-month-hit-lowest-level-in-over-six-years/

[Charles-Tim]

I read about this like 2 or 3 weeks ago but what was reported was not much more than $1 billion reduction in foreign reserves. But the decrement is increasing and this is not good. Do you not know the federal government are just manipulating the naira price and put it at the price it supposed not to be? This is one of the reasons for the reduction in foreign reserve.

The CBN governor create imbalance in a way that those importing goods and those earning in foreign currencies are the ones losing to increasing inflation in the country. If there is inflation, there supposed to be reduction in naira value, but it is the opposite since few months ago.

This present government are not doing what is right. First, they are still unable to control inflation just like the previous governmens. Second, they are increasing the value of naira when there is persistent rise in price of goods and services which supposed to lead to declination in money value, but it is the opposite.

[Hewlet]

. 
Is this something to be worried about? I have had my fears that whatever policies that the FG is putting in place that has led to the appreciation of the naira might just be a temporary solution that might hit us bad in the long run.

it better not be oh!
I know for us when de this space when e be say exchange rate de favour us, e no get as e wan be say dollar rise when e no go affect us positively but if we de consider th average masses when de our street and how the increase in the price of things take affect them, e go sure us say we no need anything when go course things to begin worsen off again.

Now when we don de hear say price of things don de finally come down small small na him this kind news go de burst out? I just hope they have plans on ground to  still stabilize everything so it doesn't become a serious course for concern.

[AVE5]

I read about this like 2 or 3 weeks ago but what was reported was not much more than $1 billion reduction in foreign reserves. But the decrement is increasing and this is not good. Do you not know the federal government are just manipulating the naira price and put it at the price it supposed not to be? This is one of the reasons for the reduction in foreign reserve.

The CBN governor create imbalance in a way that those importing goods and those earning in foreign currencies are the ones losing to increasing inflation in the country. If there is inflation, there supposed to be reduction in naira value, but it is the opposite since few months ago.

This present government are not doing what is right. First, they are still unable to control inflation just like the previous governmens. Second, they are increasing the value of naira when there is persistent rise in price of goods and services which supposed to lead to declination in money value, but it is the opposite.

You're right and without so far from the truth, the federal government is hiding something behind back which the public may not actually have clear knowledge about.
The force by which they're fighting to recover the value of naira is something else. Maybe they maybe instigating a target to achieve in no time. Every scenarios of this dollar and naira exchange in values is just being suspicious.
In the first place, what's the profit outcome If the naira has regained its stance with the foreign exchange while it still remains devalued in its own zonal regions as Nigeria?

How stupid it feels that you can cheaply trade with the naira out there in a foreign land but here Nigeria where it's practically its Traditional currency and yet it's or no values for Traditional trading?.
Something phishing and hope we don't be so quick and stupid applauding on them on the fact that they've or are earnestly recovering our naira because looking at it, it has brought no positive impacts to our local exchanges of goods.
Inflation is still rocking in our country which still got the naira recovery useless to the masses in the local regions of trading with the local exchange.

Could there had been an increase of taxation of the importers and the exporters? Probably that could be the structure of the federal government gaining from the value of the naira recovery because it doesn't seem to be amiable project structures where in such a case that only the importers and the exporters would be the only ones meriting the dividends of the naira recoveries while the poor masses in the localities are draining off of inflations where cost of living still surges high as cases of the naira still maintaining valueless in its community.

[Justbillywitt]

Nigeria’s foreign exchange (FX) reserves have witnessed a significant downturn, plunging by approximately $1.84 billion in 26 days, amidst the Central Bank of Nigeria’s (CBN) robust efforts to stabilise the naira, the FX reserves are now positioned at $32.29 billion declining from it previous record of $34.45 billion on April 21.

The likely cause of the increase is probably due to FG selling of dollar more aggressively which has led to the reduction in reserve level. Also, the recent payment of Eurobonds and other international financial obligations has also contributed to further draining of the reserves. Nigeria has also been grappling with low oil production levels, largely due to infrastructure challenges, oil theft, and vandalism. These issues significantly reduce the country’s primary source of foreign exchange revenue

The depletion of FX reserves is a cause for concern as it reflects the state of the country’s balance of payments and its ability to meet international obligations. The effect of a decline in fx reserve can lead to the following

1. A significant decline in the reserves can affect investor confidence and may lead to a credit rating downgrade, which can further impact the nation’s borrowing costs.

2. The decrease in reserves may also limit the CBN’s ability to intervene in the currency market, potentially leading to further depreciation of the naira.

. 
Is this something to be worried about? I have had my fears that whatever policies that the FG is putting in place that has led to the appreciation of the naira might just be a temporary solution that might hit us bad in the long run.

What's your view on this?
 
Source: nairametrics official site. https://nairametrics.com/2024/04/16/nigerias-fx-reserves-dip-by-over-2-billion-in-less-than-one-month-hit-lowest-level-in-over-six-years/

I have always believed that there is something that this government is doing behind the scene that's making the Naira appreciates, that they are using something else to pay with. It's just like having a dead animal around and the bad smell keeps disturbing the neighborhood, instead of finding the dead animal and bury it, you now use deodorants to reduce the bad smell. Now the question is what happens when the deodorants fade? This is exactly what this government is doing. The pressure on them was too much and they have resolved to using temporary solution, which will backfire sooner or later. I don't know how long they will keep doing this, but if we must grow as a country the government needs to identify what's actually the root cause of our challenges and fix them so that we will be free from all these in the future. What they are doing right now is just like borrowing money to pay back money you borrowed, which is not a good approach at all.

[Antotena]

Just some hours ago. Cardoso has just said the reserve is not used to defend the Naira, mention the factors that has been affecting the reserve recently here in Nairametrics  post: https://x.com/nairametrics/status/1780692345857392794?s=46&t=qJXYidUv-9dGH9cW3Joe_A

He clear said it wasn't but you and I know that anytime the government is been accused of something and they denied, then rest assured that the government is lying, they are pretending. That was how they were been exposed of paying subsidy for fuel and they denied it and then later it turn out to be true. This government can't be trusted at all and if the government is not transparent with things, how are they expecting investors to come and work with them.

How can the government lied on our faces, the reserve didn't drop all of a sudden until they started selling dollars to BDC at cheaper rates and offsetting of some debts servicing. Nigeria which way?

[Lida93]

. 
Is this something to be worried about? I have had my fears that whatever policies that the FG is putting in place that has led to the appreciation of the naira might just be a temporary solution that might hit us bad in the long run.

it better not be oh!
I know for us when de this space when e be say exchange rate de favour us, e no get as e wan be say dollar rise when e no go affect us positively but if we de consider th average masses when de our street and how the increase in the price of things take affect them, e go sure us say we no need anything when go course things to begin worsen off again.

There is nothing we the average citizen go fit do in our little way wey go get any type of positive  effect on the common man for the street because no be we be the men on the decision-making table as e concern economic matters for we country. Na just for all man to hold him guide plan for yourself so that when things the get more harder due to the incompetence of those decision makers you no go feel the effect with same weight as eim the affect others.

Now when we don de hear say price of things don de finally come down small small na him this kind news go de burst out? I just hope they have plans on ground to  still stabilize everything so it doesn't become a serious course for concern.

Abeg nah where for the country be that wey price of things the go down and we no know. Cos since I dey go market I never see any form of reduction for prices of the commodores oh.

Anyway, the truth be say this government no get any economic blueprint as a guide to use improve the economy as them come see am. And them no even ready to employ capable hands to assist in running the government administratively for them, Instead them the use the appointments in ministerial and parastatals dey use as compensation to their incompetent political allies. So expect no stabilization or sustainable solutions as we go. You can't give what you don't have.