Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 43)

External/foreign reserves depleted by 0.6% to $40.7 billon for the week in review from $41.04 billion, the lowest since January 2018.3 The reserve has steadily plunged since the last week of July, losing about $5 billion in the last 4 months. The depletion in external reserve is attributable to the Central Bank of Nigeria (CBN) intervention in the foreign exchange market to prevent depression arising from capital flight.This capital flight has been largely driven by rising uncertainties in the Nigerian economy, in addition to lower but expected increase in the United States’ interest rate. While the monetary authorities have maintained foreign exchange stability at the expense of foreign reserves, there is need for fiscal authorities to supplement efforts to sustain reserves. Social, economic and political uncertainties –arising from the recent border closure for instance – are disincentives to investment that should be tackled to boost investors’ confidence and shore up external reserves.

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