Despite the foreign exchange crisis caused by low crude oil prices and the global coronavirus lockdown, the latest figures from the Central Bank of Nigeria (CBN) show that the country’s external reserves have further risen to $34.78 billion.
The data from CBN shows that the external reserves increased sharply by $1.36 billion in just 13 days, rising from $33.42 billion as of April 29, 2020, to about $34.78 billion on May 12, 2020.
The Nigerian external reserve had been on a downward slide since last year, after hitting a high of $45.17 billion on June 11, 2019. It should be noted that the reserve lost over $11 billion within a space of 10 months.
The dramatic increase in the external reserves is coming against the backdrop of the recent disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to the CBN, about a week ago to help mitigate the impact of the coronavirus pandemic.
The CBN has been struggling to meet the demand of importers and manufacturers due to scarcity of dollars. The manufacturers under the aegis of Manufacturers Association of Nigeria (MAN) had complained of being hit hard by dollar scarcity, as members had an outstanding $1 billion foreign obligation which was yet to be met.
The CBN Governor, Godwin Emefiele, while promising to devote the foreign exchange available to strategic importation or service obligations that were a priority, also assured foreign investors who wished to repatriate their funds from the country that foreign exchange would be made available to them in an orderly manner.
The low foreign exchange earnings and pressure on the naira made CBN devalue the local currency from N307/$1 to N360/$1 as an official rate and N360/$1 to N380/$1 in the investors and exporters window.
Meanwhile, the naira hit N570/$1 in the 5-year forwards market about 7 days ago.