The 30 days moving average of the Nigerian external reserves was down to a five – month low dropping to $46.37 billion, the lowest level since March this year.
External reserves had hit its highest level in five years in May this year reaching $47.865 billion, a level it last achieved in April of 2013 when it was $47.9 billion. It has however been on a slow but steady decline since June this year dropping by 3.12 per cent between May when it was $47.865 billion and the latest figure given on August 17, 2018.
In spite of the declining reserves, the Central Bank of Nigeria (CBN) believes that the recent decline in the nation’s foreign exchange reserves and capital outflows from the country are not a cause for worry.
The central bank has maintained its regular interventions at the foreign exchange market to meet the demand in the market, selling dollars to manufacturers and small businesses as well as for invisibles such as personal and business cabell allowance and requests for school and medical fees.
While capital outflows has been on the rise, capital inflows has dropped according to latest data released by the National Bureau of Statistics (NBS). Data shows that the total value of capital importation into Nigeria stood at $5.513 trillion in the second quarter of 2018, 12.53 per cent lower than the first quarter figure.
The NBS noted that the decline was as a result of a decline in Portfolio and Other Investments, which declined by 9.76 per cnet and 24.07 per cent respectively. The Nigerian capital market has seen an outflow of foreign portfolio investment in recent months.
Acting director, Corporate Communications, CBN, Mr Isaac Okorafor, at the Bankers Committee Meeting last week said “in this country, we survived when the reserves was at $24billion; from there, we moved to $31 billion, and now we are at about $47 billion. So, I don’t see why we should be worried about this. Our reserves position is so comfortable that we can deal with any eventuality.”
Noting that the capital reversals were not as much as expected, he said “we are even in a better position of confidence.”
On his part, director of banking supervision, CBN, Mr Ahmed Abdullahi, said the outlook for the economy this year was much better than that of 2017.
He said, “We have seen stability in the exchange rate being sustained, GDP growth higher than 2017. There are capital reversals in our capital market, and it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies. It is a sign that there is high confidence in the Nigeria economy. We are happy with the developments in the economy generally.”