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Nigeria’s external reserves fall by $1.65bn in 6 months

Published

5 months ago

December 6, 2023

A fall in Nigeria’s foreign reserves by $1.6 billion to $32.97 billion has been observed since the country’s central bank’s recent efforts to unify foreign exchange rates.

In June, the central bank informed all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange Market: Abolishment of segmentation.

“All segments are now collapsed into the Investors and Exporters window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks. Re-introduction of the ‘Willing Buyer, Willing Seller’ model at the I&E Window. Operations in this window shall be guided by the existing circular on establishing the window,” the CBN had said in the June statement.

Foreign exchange reserves and the value of the naira have decreased since then. The nation had $34.62 billion in gross foreign exchange reserves as of June 15. However, the foreign exchange reserves fell to $32.97bn as of December 1, 2023, according to data from the CBN.

The Economist Intelligence Unit revealed in its most recent Africa Outlook report that Nigeria lacked sufficient foreign exchange reserves to support its policy of unifying its exchange rates.

It said, “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign exchange orders, which will keep foreign investors unnerved. High inflation and a continued spread with the parallel market will destabilise the exchange rate regime and result in periodic devaluations.”

Additionally, JP Morgan recently calculated that Nigeria’s net foreign exchange reserves were $3.7 billion after taking into account larger-than-anticipated currency swaps and borrowing against reserves. Though the CBN may source foreign exchange at commercial and semi-commercial rates, it was noted that the low net foreign exchange reserves put pressure on the foreign exchange market.

Sources close to the government have hinted that as part of measures to ensure liquidity in the country’s forex market, the Nigerian government has begun engagement with persons hoarding the dollar, as well as organizations and those found to have looted the treasury, to make them “bring their monies to the mainstream market.”

The Nigerian government has sought to stabilize the country’s economy with two major policy actions: the removal of the fiscal bleeding in petrol subsidies and the unification of the exchange rate. The results have not been positive, with the further fall of its currency value and the sharp rise in the cost of living.

Related Topics:Featured Foreign exchange Naira Nigeria

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Nigeria’s inflation hits 28-year high of 33.69% in April

Published

24 hours ago

May 16, 2024

Ifeoluwa Dada

Nigeria’s consumer inflation reached a 28-year high of 33.69% in April, up from 33.20% in March, according to statistics agency figures released on Wednesday.

President Bola Tinubu’s administration has slashed petrol and energy subsidies and devalued the local naira currency twice.

To manage pricing pressures, the central bank has hiked interest rates twice this year, including the highest hike in almost 17 years. The central bank governor has stated that rates will remain high for as long as necessary to reduce inflation. The bank will host another rate-setting meeting next week.

When compared to the previous year, the inflation rate in April 2024 was 11.47 percentage points more than in April 2023, when it stood at 22.22 percent. This implies that the headline inflation rate has increased dramatically during the last year.

According to the National Bureau of Statistics, food and nonalcoholic beverages remained the largest contributor to inflation in April. Food inflation, which accounts for most of the inflation basket, rose to 40.53% yearly from 40.01% in March.

Price pressures have left millions of Nigerians facing the biggest cost-of-living crisis in decades, as they fight to satisfy their most basic necessities.

Tinubu has offered a 35% salary increase for state personnel to alleviate pressure on government workers. To assist disadvantaged households, his government has resumed a direct cash transfer program and provided at least 42,000 tons of grains such as corn and millet.

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Uganda discusses power line to South Sudan with China’s Sinohydro

Published

2 days ago

May 15, 2024

Ifeoluwa Dada

According to the president’s office, Uganda is in negotiations with Sinohydro Corporation Limited of China to build a $180 million power transmission line that would enable Uganda to export electricity to South Sudan, which is severely short on energy.

Ugandan President Yoweri Museveni received a group led by Vice President of Sinohydro Corporation Yang Yi Xin on Monday as part of the negotiations, according to a late-morning statement from Museveni’s office.

The project, according to the statement, will entail building a new substation and expanding two existing ones in addition to building a 138-kilometre high-voltage transmission line to provide power to South Sudan.

“We are very much willing to help develop this project with the required finance if needed,” Xin was quoted as telling the president.

The statement stated that Museveni endorsed Sinohydro’s proposal to carry out the project. Uganda and South Sudan inked a power sales deal in June of last year, enabling Uganda to sell electricity to South Sudan.

To enable Uganda to export electricity to South Sudan, the two nations inked a power sales deal in June of last year. The Chinese firm is completing a $1.5 billion, 600-megawatt hydropower project on the River Nile in Northern Uganda that is meant to be the source for electricity exports to South Sudan.