The Nigerian external reserve has decreased by $3.22 billion. The development stems from the reserve being $45.07 billion at the end of June 2019 to $41.85 billion by the end of September 2019.
The decrease is attributed to the impact of volatility in the price of crude oil, increased dollar sales by the Central Bank of Nigeria (CBN) and a slowdown in dollar inflows from Foreign Portfolio Investors (FPIs). Additionally, analysts have projected the downward trend to continue this month, with the possibility of touching the $40 billion dollar mark.
Chief Executive Officer, Financial Derivative Company Limited, Mr. Bismack Rewane, during his recent monthly economic review, noted that demand for dollars will increase in the coming month. This, he placed as a result of inventory build-up leading to Christmas, which will mount pressure on external reserve, leading to a likely decline to #40 billion in gross external reserve level.
Mr. Rewane, however, emphasized optimism that the reserve stays above $41 billion. This is so that panic level among individuals remains controlled.
Also speaking on the development, the Executive Member, Corporate Banking, FSDH Merchant Bank, Mr. Ayo Akinwunmi highlighted that the direction of the reserve for the month of October is unpredictable. He, however, said the reserve may go below the $40 billion mark at the end of the month if it continues to decline the way it did in recent months.
Mr. Akinwunmi expressed fears that further drops in the reserve may lead to a reduction in an accretion of the reserves due to foreign portfolio investors being hesitant to bring in their money.