External reserves fell by $64m in January

External reserves fell by $63.62m in January, figures obtained from the Central Bank of Nigeria have revealed.

The CBN revealed in its data on movement of foreign reserves that the external reserves which ended December 30, 2022 at $37.08bn fell to $37.01bn at the end of January 30, 2023.

Nigeria’s external reserves fell by $3.43bn in 2022 after dropping from $40.52bn as of the end of December 31, 2021.

Cordros Securities stated in its January report on ‘MPC to favour smaller rate hikes in the short term’ noted that local currency weakness remained intact.

It stated that, “Foreign investors remain on the sidelines given the lack of FX reforms, higher global interest rates and weak macroeconomic narrative.

“In addition, CBN’s FX supply to the different FX market segments remains significantly below pre-pandemic levels. Meanwhile, the demand for the greenback remains high as market players continue to source for FX to fulfil and clear their outstanding obligations. Consequently, since the last policy meeting, the local currency depreciated by 3.4 per cent to N461.25/$ at the official market as of 18 January 2023.

“However, given that the FX reserves remain within the CBN’s comfort level, we expect the Committee to highlight the need for the apex bank to maintain its periodic FX interventions and intensify its call to the fiscal authorities to amplify their efforts in ensuring higher crude oil production over the short-to-medium term.

Accordingly, the Committee will likely reiterate that the CBN should address the pressures on the local currency by boosting the FX supply for productive activities.”

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