Nigeria’s FX reserves shrink 21% in 2014, pressure remains

By bne IntelliNews January 6, 2015

Nigeria’s gross foreign exchange reserves continued declining, reaching $34.47bn as of end-December, down from $43.61bn at the end of 2013, 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 6.8% since then, and pressure is remaining in view of the falling oil prices, which considerably reduce the build-up of forex reserves, and capital outflows related to shifts in foreign investor sentiment.

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. Last month, the government cut its official GDP growth forecast for 2015 to 5.5% from a previous forecast of 6.35% due to the oil price slump. The country’s 2015 budget is aiming to diversify the economy away from being too heavily reliant on oil proceeds. It targets to raise non-oil revenue to 47% of total government revenue through various types of taxes and policies.

The latest available official data showed that Nigeria produced an average of 2.15mbpd of oil in Q3, down 2.7% q/q. The price at which Nigeria sold crude oil fell to $83.5 per barrel in October from last year’s peak of $114.6 in June. The 2015 budget counts on a benchmark price for oil of $65 per barrel and on a production of 2.27mbpd.

Related Articles

AB InBev sells 54.5% stake in African Coke bottling business for $3.15bn

Anheuser-Busch InBev will sell a 54.5% stake in Africa's largest Coke bottler to Coca-Cola Company for $3.15bn, the two companies said in a joint statement on December 21. The deal is expected to ... more

IMF slashes South Africa’s 2016 growth outlook to 0.7%

The International Monetary Fund (IMF) has lowered sharply its 2016 GDP growth forecast for South Africa to just 0.7% from 1.3% anticipated in October, its World Economic Outlook (WEO) update released ... more

MTN Nigerian fine raised back to $5.2bn, court refuses to freeze company bank accounts

The record fine, imposed on South Africa-based telecoms group MTN by the Nigerian Communications Commission (NCC) has been raised back to $5.2bn, publications in local media revealed. The ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss