Nigeria’s external reserves dropped by $523m to $34.475bn as of March 16 from $34.998bn as of March 1, figures from the Central Bank of Nigeria revealed on Wednesday.
The reserves, which had continued a downward trend of recent, lost $1.1bn in February, after it dropped from $36.19bn as of February 1 fell to $35.09bn as of February 26.
The CBN had recently stated that Nigeria’s external reserves at $35bn was sufficient to finance the country’s seven months’ imports.
When the reserves had experienced gains in the last quarter of 2020, the CBN disclosed that at $36.46bn, it could finance 8.4 months of import of goods or 6.3 months of import of goods and services.
According to the CBN’s monthly economic report for the fourth quarter of 2020, the performance of the external sector improved in the review quarter, despite the challenges of sluggish global recovery, weakened global demand, soaring second wave of the COVID-19 pandemic and tense political environment in the United States.
It stated that an estimated overall balance of payments surplus of $0.79bn was recorded in the fourth quarter of 2020, from the $0.14bn recorded in the third quarter of 2020.
The CBN stated that the deficit in the current account widened to $5.27bn in the review period, compared with $3.34bn in the previous quarter.
It stated, “A net disposal of $2.5bn was recorded in the financial account, relative to $2.66bn in the preceding quarter.
“The external reserves at end December 2020 was $36.46bn, compared with $35.67bn at end September 2020, indicating an accretion of $0.79bn.
“This could finance 8.4 months of import of goods or 6.3 months of import of goods and services.”
The improvement in external reserves stock was attributed, mainly, to foreign exchange reforms undertaken by the bank to block leakages and ensure enhanced inflow of remittances from Nigerians in diaspora.
According to the CBN, public external debt stock stood at $31.99bn or 7.7 per cent of the Gross Domestic Product at end-September 2020, which was within the sustainable threshold of 40.0 per cent of GDP.
In the foreign exchange market, the average naira exchange rate at the I&E and the BDC windows depreciated to N389.04/$ and N468.17/$ in the fourth quarter of 2020, from N386.60/$ and N461.94/US$ in the third quarter of 2020 respectively, the CBN stated.