$38 bn Foreign Reserves, CBN Mauls Naira Devaluation

By Fola James

The Central Bank of Nigeria, CBN is currently under mounting pressure to devalue the naira as a result of the nation’s dwindling foreign reserves.

During her last visit to Nigeria, former managing director of the IMF Christine Lagarde, at a meeting with President Muhammadu Buhari, said the Naira was over-valued.

She  raised the need to devalue the currency.

Other experts insist that the declining external reserves cannot support the current value of the naira for a long time.

The apex bank has released a report which indicate that the Reserve drops by close to $5bn in 2019.

The report released by the CBN shows that Nigeria now has less than $40bn in its foreign reserve.

Even though the CBN Governor Godwin Emefile has dismissed the possibility of devaluing the nation’s official currency, there’s need for worry, according to monetary experts.

More concerns have been fueled due to the dwindling price of crude oil in the international market.

Over 70 per cent of the nation’s revenue is earned from crude oil sales, naturally panic is not unexpected when its price remain unstable, expert say.

On Thursday for instance, the price of Nigerian crude hovered around $54b per barrel.

If the situation persists, the foreign reserve will further deplete and this could put more pressure on the CBN to act against the Naira.

According to report obtained from the CBN on Thursday showed that the country’s external reserves increased marginally in the first quarter of 2019, from $42.54bn to $44.79bn.

The situation however changed, in the second quarter, it dropped to $44.74bn.

It further declined in the third quarter to $40.89bn.

It dipped in the fourth quarter the reserve continued to $38.07bn.

Emefiele, was reported to have said the situation did not call for worry, though Nigerians are apprehensive over the issue.

The apex ban boss explained that  the reserve was being used to meet the country’s obligations adding that the level of fluctuations was not unusual.

He said despite the dwindling level of the country’s foreign reserves, there was no possibility that the apex bank would devalue the Naira.

He said the dwindling price of crude oil  and the drop in reserves to less than $40bn was not enough reason to devalue the Naira, at least for now.

Meanwhile, financial experts informed the magazine that the apex bank will not be able to hold on for long except the issue of declining external reserves is quickly addressed.