The strength of Nigeria’s external reserves may have further weakened as it plunged to $35.633 billion despite strong run of oil price, with the country shedding $565 million.
Lamentably, the country’s external reserves not nosedived but also queued behind Egypt, South Africa and Ghana in reserves per capita.
For two weeks, the external reserves fell from $36.198 billion reported on February 1, 2020, to $35.633 billion as of February 15, plunging beyond the $36.34 billion of January 26, which was when the decline started.
From available figures from the Central Bank of Nigeria (CBN), the country’s external reserves had begun the year at $35.65 billion, appreciating to $36.52 billion as of January 25, 2020.
However, rise in crude oil prices, partial global economic recovery amid optimism over the discovery and distributions of COVID-19 vaccines by most developed economies, had been the reason CBN Governor, Godwin Emefiele, gave for the four weeks boost in external reserves of January.
The CBN has now credited the fall in external reserves in the first two weeks of February on lower foreign exchange receipts, as well as interventions sustained to stabilise the exchange rate.
This means despite the rise in crude oil price which currently sells at $64.59 – beyond the 2021 budget benchmark of $40 – and the continuous vaccination of persons amid full economic activities, Nigeria’s external reserves is unable to withstand government interventions.
Nigeria’s reserves per capita is behind the likes of Egypt, South Africa and Angola, all of which have a higher reserves per capita. At a time Nigeria’s reserves per capita fell, that of Egypt rose.
Nigeria’s reserves per capita fell to $169.5, below the $172.60 reported in October 2020, at the same time Egypt’s reserves per capita increased to $342.36, as against the $338.92 in October 2020.
Meanwhile, South Africa’s reserves per capita is $725.49, higher than Nigeria’s figure, while Angola also stayed above Africa’s largest economy with $461.32.
Nigeria’s external reserves contracted by $3.17 billion or 8.23% at fourth quarter last year as proceeds from sales of crude oil, which provides more than 90% of its foreign exchange earnings, were largely depleted by an oil crash as well as the coronavirus pandemic.