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Bloomberg recently estimated that Nigeria’s foreign exchange reserves have declined dramatically in recent times. This revelation came after the Nigerian Naira started to pick up, gaining against the dollar after crashing to its all-time low.
Analysts speculate that the Central Bank of Nigeria (CBN) may be using the money from the country’s reserves to strengthen the local currency.
According to recent Bloomberg findings, Nigeria is depleting its foreign exchange reserves at a rate not witnessed in the last four years.
This has raised concerns that the CBN is reducing the amount of dollars it owns in order to maintain the value of the Naira. It is worth noting that the Naira, the currency of Africa’s largest oil producer, has recovered most of its losses following a 43% devaluation in January.
This recovery was facilitated by the implementation of policies by the CBN to enhance liquidity, attract capital inflows, and empower the market to determine the value of the Naira.
Analysts speculate that the CBN is using its foreign exchange reserves to clear backlogs and return the Naira to a realistic exchange rate.
The hope is that this move will encourage both local and foreign investors to start investing in the local currency and restore liquidity to the foreign exchange market.
Nigerians have taken to social media to express their thoughts on this development.
While some predict that the Naira will eventually fall again to a worse state, others remain optimistic about the recent gains made by the currency.
@EmekaGift100 said: “People should hold onto their dollar, Naira will sink to the worst state in the history.
“Bloomberg has just raised alarm that Nigeria is burning its foreign reserve to subsidies dollar Bloomberg has just raised serious concern that Nigeria is burning through foreign-exchange reserves at a rate not seen in four years, raising concerns that the central bank is depleting its dollar holdings to support the naira after pledging it would allow the currency to float more freely.”
@olumidecapital said: “The naira has gained almost 40% against the dollar since mid-March. While Food inflation is stationed at 40% despite the fact that the country is not fighting with anyone.”
@A__danhajia said: “It was also garthered that the price of rice is crashing as the #Naira gain values while #Dollar crash.”
@AishaYesufu said: “People that bought dollar for speculation have excess money for that and frankly they have their dollars and I will say to them keep your dollars closer.
“The main victims of this disastrous Cardoso experiment are businesses who will now be dealing with losses. Any business can whether bad situation but you see uncertainty?! It kills businesses! That is what these disasters are doing.”
“Keep your dollars closer! Your one thousand dollars will buy one thousand dollars worth of things whether Naira decides to go either way. And no matter the disastrous policy Tinubu’s illegitimate government decides to embark on you still have your one thousand dollars to use!”
@ShehuSani said: “What goes up must come down; Dollar obeyed the laws of gravity while food prices are still hanging high up.”
@abbkar_ai said: “Dollar is dropping, but stuffs are still cost. Issues dey for our country.”
It is clear that the issue of Nigeria’s foreign exchange reserves and the value of the Naira remains a topic of concern and interest for many Nigerians.
It remains to be seen how this will unfold in the coming months and what impact it will have on the Nigerian economy.
This article was updated 1 month ago
