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Nigeria’s External Reserve Loses $24 Million First Week In The Year 2022

Nigeria’s External Reserve Loses $24 Million First Week In The Year 2022

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Nigeria’s External Reserve Loses $24 Million First Week In The Year 2022

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Nigeria’s External Reserve Loses $24 Million First Week In The Year 2022

Nigeria’s foreign exchange reserves fell $24.3 million in the first week of the year, closing at $40.49 billion on January 7, 2021. When compared to the $40.42 billion recorded at the start of the week, this is a 0.06 per cent decrease.

This is based on daily reserve movement statistics from the Central Bank of Nigeria (CBN).

 

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The country’s foreign reserve increased to $5.99 billion in October, up from $2.76 billion in September 2021, as a result of the federal government’s $4 billion Eurobond and the $3.35 billion IMF Special Drawing Rights facility

However, after crossing the $41 billion thresholds in November, the reserve began a downward trend. Nigeria’s foreign reserve fell by $611.01 million in November, followed by a drop of $666.17 million in December.

In 2021, however, the annual gain was $5.15 billion.

Nigeria’s External Reserve Loses $24 Million First Week In 2022

What is the cause of the decline?

The apex bank’s action in guaranteeing FX stability in the economy is to blame for the government’s ongoing fall in external reserves. According to data from the Central Bank, the bank provided $8.97 billion to the I&E window, SME, and Invisibles.

 

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After the Central Bank halted the selling of forex to BDC operators in mid-2021, the Investors and Exporters Window (I&E) became the official market for the sale of foreign exchange in the country. Between January and June 2021, however, a total of $2.77 billion was sold to BDC operators.

Given the apex bank’s managed floating foreign exchange system, the CBN periodically intervenes in the FX market to limit market volatility by releasing funds from the reserve.

Nigeria’s External Reserve Loses $24 Million First Week In 2022

According to statistics from Nairametrics Research on the I&E Window, at least $337.7 million was traded on the exchange in the review week, while the official exchange rate rose by 4.3 per cent to close at N416.25/$1, up from N435/$1 at the conclusion of the previous week.

 

External Reserves: What You Should Know
Foreign reserves are assets maintained in reserve by a country’s central bank to support liabilities and affect monetary policy. Foreign currencies, deposits, bonds, treasury bills, and other foreign government instruments fall under this category.

 

These assets are retained for a variety of reasons, but the most important is to ensure that a government or its agency has backup funding in the event that their national currency devalues rapidly. International or external reserves are other names for foreign exchange reserves.

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