Nigeria’s gross foreign exchange reserves continued declining, reaching $34.09bn as of February 2, down from $34.47bn at the end of 2014, 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, and the central bank increased its market interventions to support the exchange rate. On November 25, the central bank devalued the naira by 8% and raised its monetary policy rate by 100bp 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 7.8% since then.
Soft oil prices are exerting a significant pressure on the build-up of forex reserves, as oil exports are the key source of foreign exchange for the West African country. In addition, possible complications may come from capital flow reversal related to shifts in foreign investor sentiment.
The latest available official data showed that Nigeria’s exports of crude oil and gas fell 2.8% y/y to $21.86bn in Q3 2014, accounting for 96.4% of all exports.
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