According to data from the Central Bank of Nigeria (CBN), the gross foreign reserve, as of 15 August increased by $12.4 million to stand at $38.89 billion. This represents a 0.03 percent increase from $38.88 billion recorded on August 10, 2022.
It is worth knowing that this slight uptick in the gross foreign reserve is insignificant, as Nigeria’s depleting reserve is not sufficient to finance the large volume of imports in the country and is also inadequate in supporting the naira. Foreign reserve is fundamental to maintaining currency strength and import availability.
The price of Crude oil, the major contributor to the reserve, has remained elevated for several months now, rising above the $62/b benchmark price fixed in the 2022 National budget. Data from Opec and Statista show that as of January 3, 2022, the BRENT crude price was $78.98, the OPEC reference basket was $78, and the WTI crude price stood at $76.08. By August 16, 2022, these prices have risen to $92.49 for BRENT oil, 8$7 for WTI crude, and the OPEC basket stands at $97.44, as of this reporting time.
The gross reserve at the beginning of 2022 was $40.5 billion, hanging above the August reserve balance by a whopping $1.6 billion. Clearly, the rising oil prices have not fed into Nigeria’s foreign reserve.
The CBN has been taking steps to drive down the demand for the dollar, however, efforts should be directed toward increasing non-oil earnings. Also, sectors like mining, manufacturing, and agriculture, to mention a few, need to be stimulated to help expand the nation’s reserve in the medium and long term.