Foreign Exchange Reserve in Nigeria moves north of 36.4 billion (USD) in May from 33.4 billion (USD) in April of 2020. This is against the backdrop of the 32 billion (USD) forecasted at the beginning of Q2 2020.
Also, Brent crude hitting the $39.35 per barrel mark is a step in the right direction for Nigeria, a country whose major revenue stream is from the downstream sector. Nigeria’s Foreign Exchange earning and economic viability is predominantly oil – it is our Lifeblood.
Recall, that the Central Bank of Nigeria (CBN) devalued the Naira by 15% towards the end of Q1 2020. This move was to help boost exports, shrink trade deficits, and reduce the cost of interest payments on its outstanding government debts. Although it was criticized by many, the Apex Bank was said to have adjusted its currency to a level that it was able and willing to support with its foreign exchange reserves.
All of these, with the recent increase in the price of Brent crude, has been a catalyst to the Foreign Exchange Reserve.
Also, this rise is a true indication that the Central Bank Nigeria (CBN) Governor, Mr. Godwin Emefiele is living up to his words of defending the Naira. He is also hitting hard on hoarders of Foreign Exchange and manipulators of Nigeria’s Foreign Exchange rate.
This indicates that the pressure on the Naira in the parallel market will ease off soon. The Naira is currently selling at N447 to 1$.
What to know about Nigeria’s Foreign Reserve.
Nigeria’s Foreign Exchange Reserve from 1960 – 2020 is said to have hit an all-time high of $62.08 billion and an all-time low of $63.22 million.
According to the Act of 2007, Nigeria’s Forex Reserve assets consist of some the following:
- Nigeria’s Gold Tranche in the International Monetary Fund (IMF).
- Allocation of Special Drawing Rights (SDR) made to Nigeria by the IMF; and
- Treasury bills (with a maturity period not exceeding one year) issued by other countries.
- Securities and investments of other Countries.
There’s still a glimpse of hope, let’s keep our fingers crossed.