Forex reserves drop to $29.3 billion

Nigeria’s foreign exchange reserves have hit a record low of 29.3 billion from $29.8 billion the previous week.

The declining Forex profile has been a constant feature since the beginning of 2015.

The trend is believed to have been triggered by falling oil prices and attempts by the Central Bank of Nigeria (CBN) to defend the Naira.

A report from Afrinvest Securities Limited, titled: “Nigerian Reserves at Record Low…Time to Float the Naira?, showed that declines were at their highest on February 16 and 23 at 1.2 per cent each, which correspond to the postponement of the elections and shutdown of the Retail Dutch Auction System (RDAS) respectively.

The report further showed that the reserves had dropped at a daily average of 0.2 per cent before and after the official window was scrapped.

“While inflow to the reserves remained impaired by lower prices of crude oil in the global market (as oil revenue accounts for approximately 90 per cent of the reserves accretion), we suspect that the apex bank’s monetary policy committee may be moved to take a major decision on exchange rate at its next seating in May. Perhaps, taking the bull by the horns to float Nigeria’s exchange rate,” the report read.

The CBN recently limited overseas Naira debit card spending to $50,000 yearly from $150,000 for overseas transactions in its latest attempt to stabilize the Naira.