Data from the Central Bank of Nigeria revealed that the country’s foreign exchange reserves dropped 1.94 per cent month-on-month to stand at $38.76bn on October 29, the lowest level in more than three months.
The reserves also declined 14.28 per cent year-on-year, comparing it with $45.22bn the same time last year. The reserves were last seen at the current level on July 21, when they stood at $38.72bn.
The CBN had in recent time increased the amount of dollars sold at its twice-weekly foreign exchange auction, and also sells dollars directly to banks on the interbank market to provide support for the naira and calm the market.
The naira over the last five weeks has been under pressure from diminishing global oil prices, which has made offshore investors to cut back their positions in the debt and stock markets.
The foreign exchange reserves have declined 13 per cent this year, to $39.3bn as of October 27 as the CBN sold dollars to prop up the naira, and as oil production missed estimates.
According to the report, the naira outlook in the run-up to the forthcoming election is destabilized by risk of election-related spending pushing liquidity above target and from additional oil price weakening.