Foreign reserves increase by $1.14bn in 11 days amidst the rising oil price

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Nigeria’s foreign reserves expanded by $1.136 billion in the eleven-day period between 1st and 11th May 2020, compared to their balance of $33.521 billion at the end of April.

The current balance of $34.657 billion posted on the Central Bank of Nigeria (CBN) website Wednesday morning translates to a 3.39% month-on-month growth to date.

Oil, which accounts for over 90% of Africa’s biggest economy’s foreign exchange earnings, have plummeted significantly in value in the past few months, owing to record glut in the global oil market coupled with shrinking fuel demand triggered by the coronavirus plague.

““Based on the current downturn in oil prices, staff projections indicate that output in 2020 would be less than earlier envisaged.

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““The major downside risks to this outlook, however, include the continued spread of COVID-19; further decline in crude oil prices and the reduction in accretion to external reserves; reduced government revenue leading to weak aggregate demand; declining non-oil receipts; as well as infrastructural and security challenges,” Godwin Emefiele, the CBN chief, said at the last Monetary Policy Committee meeting of the apex bank.

But moderate improvement in the oil price in the past few days due to easing of lockdowns in the world’s major economies has been generally favourable to oil prices, with Nigeria’s premium oil grade, Bonny Light hitting $25.6 per barrel Tuesday, having fallen to as low as $16.94 per barrel as of 25th April.

The country’s international reserves have been on a free fall for around ten months, starting from last July, contracting by $10.513 billion before rescue came their way.

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