Reserve plunges by $2.9bn as banks tighten forex

The foreign exchange (forex) reserve of Nigeria dropped by $2.9 billion within eight months, according to the International Monetary Fund (IMF).

As of June 13, the reserve was at $38.616, according to the Central Bank of Nigeria (CBN).

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Last week, some banks, including Stanbic IBTC, told customers they require six to eight weeks’ notice to process forex applications

They blamed the situation on limited forex. “We are committed to improving your banking experience with us and providing you with top-notch services, hence following the limited supply of FX by the CBN,” stated Stanbic IBTC.

IMF in a statement on Wednesday after its end of mission visit to Nigeria, said, “Despite supportive oil prices, gross FX reserves fell to $38.6bn at end-May, 2022, having reached $41.5bn in September 2021, boosted by Special Drawing Rights (SDR) allocation and Eurobond issuance.”

IMF also said the current account deficit narrowed significantly in 2021 helped by import compression and a higher net oil balance.

It further said, “However, the improving trade balance, which has continued so far in 2022, is having a limited impact on forex strains with the exchange rate premiums in the parallel market staying in the 35 to 40 per cent range since October 2021.”

On the real Gross Domestic Product (GDP), IMF stated that the growth was broadening to all sectors except oil, but that inflation remained high.

However, the economic recovery continues to gain strength on the back of services and agriculture with GDP growth reaching 3.6 per cent in Q1 2022.

An IMF team led by Ms Jesmin Rahman held meetings with the Nigerian authorities from June 6 to 10, 2022, to discuss recent economic and financial developments and the economic outlook for the country.