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Nigeria’s foreign exchange reserves have declined to $36.32bn as of August 29, 2024, according to data released by the Central Bank of Nigeria. This marks a decrease from the year’s peak of $36.70bn recorded on July 29, 2024.
The decline in reserves has raised concerns about the country’s economic stability, as foreign exchange reserves play a crucial role in supporting the value of the naira and ensuring that the country can meet its international payment obligations.
Economists have attributed the decline to increased demand for foreign exchange and a slowdown in foreign inflows. “The decline suggests growing pressures on the reserves, possibly due to increased demand for foreign exchange in the economy and a slowdown in foreign inflows,” said Olufemi Idris, an economist at Phemmy Gracey Limited.
The reserves had experienced fluctuations throughout the year, rising to $36.70bn in July before declining in August. The recent decline has sparked concerns about the country’s ability to meet external obligations and maintain the current exchange rate regime.
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Analysts have warned that if the trend continues, it could undermine the country’s ability to meet external obligations and maintain the current exchange rate regime. “The government must prioritise production and export to earn foreign exchange and stabilise the reserves,” said Femi Oladele, a public policy enthusiast.
The Central Bank of Nigeria’s foreign exchange management strategy will be closely watched in the coming months as it seeks to balance the need to support the naira with the imperative to conserve the country’s foreign reserves.
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