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External reserves hit 11-year low to $24.21bn

The country’s external reserves have hit an 11-year low of $24.21bn, according to the latest data posted at the official website of the Central Bank of Nigeria yesterday.

Analysts say the development means a limited amount of dollars will be available at the official interbank spot market, fuelling concerns over another round of depreciation of the naira.

The country’s external reserves had depleted to a then record-low of $24.8bn about two weeks ago.

The foreign exchange reserves fell by $600m in two weeks before shedding $1bn in four weeks, the CBN statistics showed.

Specifically, the reserves fell from $25.8bn on August 16 to $24.8bn on September 16. It decreased by $600m from the $25.4bn recorded on August 31 to $24.8bn on September 16, the current CBN data revealed.

The spate of decline in the external reserves follows the CBN’s almost daily interventions at the interbank/official foreign exchange market in recent weeks, as chronic dollar shortage continues to weigh on the economy.

But in its efforts to defend the naira and prevent it from falling further at the official interbank market, the central bank has been selling dollars there more frequently.

The naira had fallen to an all-time low of 365.25 to the dollar at the interbank market on August 18 before making a gradual recovery.

Only Friday last week, the local currency closed at 305 against the greenback at the official market, while closing at 460 to the dollar at the parallel market on the same day.

It would be recalled that that the CBN had on June 20 lifted its 16-month-old currency controls and auctioned about $4bn on the spot and futures markets to clear a backlog of dollar demand and help boost interbank market trading.

Observers however say the global plunge in oil prices caused the reserves to be depleting very fast especially in an economy that is import dependant with poor local producing capacity.