Nigeria’s Foreign Reserve Plunges Despite Higher Oil Prices

Nigeria’s foreign reserve has declined rather than being boosted by higher crude prices, figures published by Central Bank of Nigeria show.

The foreign reserve opened the year on 4 January with $35.6 billion, but as at 1 March, the reserve was down to $34.996 billion.

 The highest level it reached was in the $36 billion range from January up till 5 February. On 8 February, it fell to $35,927,981,941.

 It has not recovered to the January-early February level, even as oil prices increased from $54.66 per barrel on 6 January to $66, quoted by CBN on Wednesday. 

 The plunge is graphically shown better by the CBN as it showed a deep dive from $36.5 billion to $34.996 billion.

Nigeria at present produces about 1.65million barrels of crude a day, in compliance with OPEC quota. Crude export accounts for about 90 percent of Nigeria’s foreign exchange earnings, but the nation spends over $10 billion yearly importing refined products. 

 The poor flow of dollars into the reserve affects the nation’s exchange rate with other currencies. 

 The Nigerian Naira has been under pressure for months, with the CBN announcing an official devaluation from N379 to N410. 

 This however, has not been reflected on the CBN website, as banks offer the dollar at N415 at GTBank and N450 at Access Bank. In contrast, the street value has stabilised at N475-N480.