External reserves fall but naira gains

The Central Bank of Nigeria (CBN) has revealed that the fall of the country’s external reserve continued in March, as it fell by $1.55 billion.

According to the bank, the external reserve fell from $31.356 billion to $29.79 billion by Monday, March 30, representing a 4.9 per cent decline.

The external reserve has fallen by $4.49 billion, which is 13 per cent since the beginning of the year, as the economy suffers from reduction in revenue due to fall in prices of oil.

However, the naira appreciated by seven per cent to N211 a dollar at the parallel market at the end of March.

The local currency, which was selling around N228 a dollar in March, is expected to appreciate further to N197 a dollar following the conclusion of the presidential election.

Foreign exchange dealers said the demand for dollar had reduced compared to what happened before the presidential election.

There was high demand for the dollar before the election in anticipation of post-election violence, which never occurred, leading to a reduction in demand for the dollar.

It would be recalled that the continued decline of the external reserve and the naira was cited by Fitch, a credit rating company, for downgrading Nigeria’s credit rating to negative, while the government insisted that there was no cause for alarm.