External reserves drop by $915m over naira float

Bisola David
Bisola David
Naira drops despite weak dollar, trades at N925/$ on black market

Nigeria’s external reserves fell by $915 million following the Central Bank of Nigeria’s formal flotation of the naira and liberalization of the foreign exchange market.

According to CBN statistics released on Sunday, reserves declined from $34.66 billion on June 14, 2023, when the naira was launched, to $33.74 billion on August 24, 2023.

On June 13, a day before the CBN announced the naira float, the naira closed at 471.67/$ in the Investor & Exporter forex window.

Following the news, the local currency plummeted to more than 700/$ at the I&E window. Since then, the naira has traded at or above 700 per dollar.

On Saturday, the naira was bought and traded for 900/$ and 915/$ in the parallel market.

According to Bureau de Change operators, pounds sterling were bought and sold for N1160 and N1180.

The naira began trading at 773.29/$ on Friday and reached a high of 799.9/$ before finishing at 778.42/$.

The acting Governor of the Central Bank of Nigeria, Mr Folashodun Shonubi, stated at the most recent Monetary Policy Committee meeting, “Accretion to external reserves remains weak while foreign exchange demand pressure persists.”

While emphasizing that the apex bank would rescue the naira from further depreciation, he promised to crack down on unlicensed Bureau de Change operators.

The news comes after the Nigerian National Petroleum Corporation announced a $3 billion loan from the Africa Import and Export Bank as a temporary solution to improve dollar supply in the country.

The  President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, stated that the CBN would be tough on unlicensed operators in their efforts to stabilize the naira.

“At a sensitization engagement between the CBN and a few of our compliance officers across the zones, the central bank reiterated that by August 31, 2023, any breaches on the allowable margin of -2.5% and +2.5% on the average weighted rate of I&E closing rate, rendition of returns, and payment of penalties, if any, will result in the operator’s operating license being revoked,” he said.

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