Nigeria’s external reserves have dipped by approximately $342.97 million over a period of nine days.
This is according to the latest data on the reserves from the Central Bank of Nigeria (CBN).
The marginal decline in the country’s foreign exchange (FX) reserves precedes the Nigerian government’s move to issue a $500 million domestic dollar bond.
This move is expected to attract local and foreign investors and provide much-needed support to the external reserves.
What the data says
As of August 15, 2024, the reserves stood at $36.53 billion, down by approximately 0.93% from $36.87 billion recorded on August 7, 2024.
On August 7, 2024, the reserves were recorded at $36.87 billion. Over the next few days, the reserves steadily decreased, with August 8 showing a slight dip to $36.84 billion, marking a decline of approximately 0.06%.
By August 9, the reserves had further diminished to $36.83 billion, representing a more modest daily decline of 0.05%.
The decline became more pronounced over the following days, with August 12 witnessing a drop to $36.62 billion, a decrease of 0.57% from the reserves recorded three days earlier.
This was followed by another decline on August 13, when reserves stood at $36.57 billion, reflecting a further 0.14% reduction.
By August 14, the reserves had decreased slightly to $36.54 billion, showing a minimal drop of 0.02%, highlighting the continued strain on the reserves.
First time in 4 months
The period culminated on August 15, 2024, with reserves hitting $36.53 billion, a total decline of 0.26% from the previous day and marking a cumulative decrease of 0.93% over the nine-day period.
This persistent decline comes after a four-month period of about $4 billion growth in the external reserves.
It further highlights the struggle faced by Nigeria’s financial authorities in maintaining reserve levels amidst ongoing economic pressures, including the need to meet import demands and debt obligations, as well as manage liquidity for the naira’s stability.
What you should know
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, earlier stated that the $500m domestic dollar bond will enhance external reserves and help stabilize the foreign exchange situation in the country.
Edun said this in Lagos at the hybrid roadshow organized by the Debt Management Office (DMO) ahead of the offer’s tentative opening on Monday.
He added, “This historic issuance will provide essential foreign exchange liquidity and boost reserves, which will help stabilize the exchange rate, manage inflation, and eventually lower interest rates. It will also lay the foundation for increased investment by both domestic and foreign direct investors.”
He further stressed that the bond is a strategic move to channel funds into sectors that will catalyze economic growth in the country.
Nairametrics reported that the Federal Government of Nigeria plans to issue its dollar-denominated domestic bond on Monday, as it hopes to raise $500 million from local and foreign investors.
This dollar bond is the first of its kind in the country, with the bond offering bullet repayment at maturity in US dollars and full repayment of the principal amount at the end of the five-year term.
The Nigerian government hopes to double its offer amount as it targets $1 billion in subscriptions through this bond auction.
Investors can subscribe with a minimum amount of $10,000, with additional investments in multiples of $1,000 thereafter.