Nigeria’s external reserves have come under fresh pressure, dropping by about $850 million within three weeks as foreign exchange demand intensifies and fiscal spending linked to the election cycle rises.
According to recent data from the Central Bank of Nigeria, reserves fell from $50.03 billion in mid-March to $49.18 billion by early April, reversing a consistent build-up observed in recent months.
According to market operators, the decline is caused by a variety of factors, with continued FX operations by the top bank taking center stage. Efforts to steady the naira have necessitated constant injections of dollars into the economy, therefore slowly depleting the reserve buffer.
Simultaneously, international investors are withdrawing or repatriating funds in response to changes in global interest rates, thereby increasing capital outflows.
The News Chronicle gathered that increased government spending related to the election cycle has also boosted demand for foreign currency, thus worsening the nation’s foreign position at a period when inflows remain erratic.
Analysts claim that deeper structural problems, including strong dependence on oil revenues and ongoing import demand, continue to expose reserves to volatility. Although rising crude prices offer some support, flows have not fully offset growing commitments, including debt servicing.
Some experts claim the recent decrease is within the anticipated range, even though it has dropped. They claim that stabilizing reserves over the longer run depends on boosting non-oil exports, raising investor confidence, and maintaining FX changes.
