Nigeria’s foreign exchange reserve has plunged by $1.2bn. It dropped from $36.3bn on January 29, 2021, to $35.1bn (3.31 per cent) as of February 28.
This is according to the information from the Central Bank of Nigeria on the country’s daily foreign reserve position.
The reserve plummeted significantly in February despite the increase in global oil prices, considering that the country relies heavily on crude oil sales to bolster its forex reserves. Price of Brent Crude rose to pre-pandemic levels to trade at $69.6 per barrel on the back of Organisation of Petroleum Exporting Countries’ move to sustain supply cut.
Meanwhile, the persistent decline in Nigeria’s foreign reserve has been attributed to the apex bank’s intervention in the forex market to stabilise it.
The naira had been under intense pressure since the Coronavirus Disease outbreak, leading to its devaluation twice last year.
Recently, the Nigerian currency dropped against the United States’ dollar in the Nigerian Autonomous Foreign Exchange window; it exchanged for N410 to $1, accumulating more pressure in the Investors and Exporters window.
This downturn is coupled with escalating inflation rate. According to data obtained from the National Bureau of Statistics, Nigeria’s consumer price index, which measures inflation rate, rose by 16.47 per cent year-on-year in January 2021, while food inflation jumped to 20.57 per cent in the same month.
A sustained inflation rate implies that Nigerians’ ability to meet their daily needs is diminishing by the day, as their purchasing power erodes, while the country just recovered marginally from an economic recession caused by COVID-19.
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