Nigeria’s foreign exchange reserves contracted by $269.47 million in the five-week period to December 12, according to data from the Central Bank of Nigeria (CBN) seen by Lagos Times newspaper on Monday.
The foreign exchange reserves, which had a balance of $35.656 billion on 4th November, declined to $34.925 billion on December 12.
Godwin Emefiele, the governor of the CBN said that curbs on global travel and the slowdown in commercial activities triggered a significant fall in demand for crude oil, which accounted for a 65 per cent crash in crude oil prices from January to May 2020.
“The drop in crude prices, along with OPEC reduction of Nigeria’s production quota, led to a significant decline in our foreign exchange earnings, along with a more than 60 per cent decline in revenues due to the federation account,” Mr Emefiele said.
Nigeria, like other emerging market countries and oil-dependent economies, saw a drop in its foreign exchange reserves as a result of lower crude oil earnings and a retreat by foreign portfolio investors, he added.
Mr Emefiele said that naira was devalued from N305/$ to N360/$ and subsequently to N380/$.
Nigeria’s foreign exchange reserves have come under intense pressure this year as a result of steep drop in dollar revenues, which has forced monetary revenues to devalue the naira by as much as 20 per cent.
The foreign exchange reserves have dropped by about 4.5 per cent since May, when they advanced to $36.6 billion, after recovering from April lows, when they were hit by fall in oil prices and the global coronavirus pandemic.