Week-on-week decline spikes by 49%
AT the backdrop of a sustained slide in the country’s fortunes, the nation’s external reserves is set to drop below $37 billion, the lowest level in 27 months.
Last week the downward trend in the reserves which commenced, July 5, 2019, worsened, as the week-on-week (w/w) decline shot up by 49 percent. Data from the Central Bank of Nigeria (CBN) showed that the external reserves dropped to $37.231billion on Thursday, February 13 from $37.725 billion a week earlier. This represents $494 million w/w decline and 49 percent deterioration when compared with the previous week’s $331 million decline.
Financial Vanguard analysis also showed that the $494 million w/w decline represents the highest in 14 weeks, since October 10, 2019, when the reverses suffered w/w decline of $446 million.
The continued decline in external reserves is majorly due to increased dollar sales by the CBN to defend the naira in the face of huge dollar demand by foreign portfolio investors exiting the nation’s fixed income market.
Financial Vanguard investigations revealed that the sharp decline in reserves last week might not be unconnected with the increased dollar injection by the apex bank into Investors and Exporters (I&E) window also last week to ensure the naira did not depreciation to N365 per dollar in the window.
On Tuesday the naira depreciated to N364.95 per dollar in the window, from N364.37 per dollar closing rate on Friday the previous week(Vanguard).
