Over the last two weeks, ending Friday, October 16, 2016, Nigeria’s external reserves shed more than $600 million, bringing its total loss to $1billion in four weeks.
According to the latest data from Central Bank of Nigeria, “The reserves fell from $25.8billon on August 16 to $24.8billon on September 16, and decreased by $600millon from the $25.4billion recorded on August 31 to $24.8billion on September 16.”
This was described by analysts as unprecedented in the country’s history. The development means a limited amount of dollars will be available at the official interbank market, fuelling concerns over another round of depreciation of the naira. In its efforts to defend the naira and prevent it from falling further at the official interbank market, CBN has been selling dollars more frequently, but naira has maintained its steady fall, exchanging for as low as 355.25 to a dollar at the interbank market on Friday.
The apex bank had on June 20 lifted its 16-month-old currency controls and auctioned about $4billion on the spot and futures markets to clear a backlog of dollar demand and help boost interbank market trading.
An economist, Mr. Henry Moyo, in his reaction, expressed concern that unless government took drastic measure to reverse the trend, the Nigerian economy may totally run out of steam, a situation he said would lead to multiple economic woes.
The global plunge in oil prices caused the reserves to deplete very fast. The development had forced the CBN to introduce foreign exchange controls, which were abandoned in June.
