Over the last four months, Nigeria’s foreign exchange reserves have decreased by $1.82 billion, according to official data and reports. The forex reserves have been on a downward trend since the start of the year, with fears that the economy may face more difficult times in the months ahead.
Last week, the reserves fell by $47.83 million, closing the four-month period at $35.36 billion, compared to $37.08 billion at the end of 2022, representing the lowest point in recent months. Analysts have expressed pessimism about the future of Nigeria’s forex reserves, expecting them to continue to deteriorate, which could exacerbate currency risks and delay recovery.
One member of the Presidential Economic Advisory Council, Bismarck Rewane, described the outlook for Nigeria’s forex reserves as negative, saying that the external reserve was expected to continue its downward trend in the coming weeks as major sources of forex inflows deteriorate.
He also noted that the declining reserves could lead to a further weakening of the naira, and limit the Central Bank of Nigeria’s ability to supply foreign exchange to support the currency at the forex market.
Nigeria’s forex reserves position and currency crisis have been attributed to the CBN’s currency management stance, including its fixed-rate and controlled exchange policy.