09 August 2018 : The external reserves of Nigeria have fallen from $ 47.01 billion to $ 46.9 billion, which represents a 4-month low. While, the dollar reserves declined by 0.31% w/w.
Similar to the equity market the smoke of the political menace is leaching to the FX reserves as well, as the foreign portfolio investors are bidding good-bye to the market. However, this isn't a massive concern, as history has shown us that the pre-election period normally calls for a drop in the external reserves .
But this specific decline could also be fueled by the dip in the crude oil production, which has fallen down by 5% q/q, according to Q2’18 Opec data, from 1.8 million b/d in Q1’18 to 1.6 million b/d in Q2’18, while the oil prices surged by 17% from $ 67p/b to $ 79.44 p/b. Since the Nigerian economy is quite dependent on crude oil exports , the decline in crude oil production leads to decline in the forex reserves.
In terms of imports and exports , while the imports grew due to a stable FX market in H1’18, the exports dropped due to the decline in the crude oil production.
Nigeria witnessed the lowest foreign inflow last month ( about $ 1.6 billion ) since Aug’17 in the I&E window; consequently the dip in inflows have led to the drop in the country's gross reserves during the same period.
Reporting for EasyKobo on Thursday ,09 August 2018 in Lagos, Nigeria
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