Nigeria’s gross foreign exchange reserves continued declining, reaching $36.3bn as of December 5, their lowest level since July 2012, despite the central bank’s efforts to stop their depletion, central bank data showed.
The forex reserves of Africa’s biggest oil producer have been on a downward trend since August, when the local naira currency was hit by the fall in global oil prices. Nigeria relies on oil receipts for about 70% of government revenues, so the sharp drop in oil prices poses significant risk for the country’s fiscal outlook.
According to the latest available statistics office data, Nigeria exported NGN3.27trn ($17.8bn) worth of crude oil in Q2, up 20.6% y/y.
Last month, the central bank of Nigeria stepped in and devalued the naira by 8%, as well as raised its monetary policy rate by 100bps to a new a record high of 13% in a bid to stop the depletion of foreign exchange reserves. However, the stock of forex reserves has narrowed 1.8% since November 25, when the package of measures was announced.
The current level of external reserves provides approximately 7 months of imports cover, but pressure is remaining in view of the falling oil prices, which considerably reduce the build-up of forex reserves, and capital outflows related to the expected rate hike in the US.
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