After a month of President Bola Tinubu in office, Nigeria’s external reserves dropped by about $2.8 billion in the first half of 2023, reaching around $34.1 billion in June, due to weak crude oil output and a lack of foreign investor participation in the capital market.
The decline in reserves continued since the new administration came into power in May 2023, despite the unification of the naira and the introduction of a managed exchange rate float.
Experts attribute the decrease in reserves to costly projects, such as election expenses and currency redesign, as well as the uncertainty surrounding election years and recent policy changes.
Nigeria’s external reserve has fallen by about $2.8 billion in the first half of 2023 as Nigeria continues to struggle with weak crude oil output and a lack of foreign investor participation in the capital market.
The external reserves opened the year at about $37 billion but have now dropped to about $34.1 billion as of June 2023.
Nigeria’s external reserve is an important barometer for valuing the country’s currency. It is also used to estimate how many months of imports it can finance.
The external reserve has also dropped by almost one billion dollars since the Tinubu administration came into power on May 29th, 2023. The external reserve has gone from $35 billion as of May 30th to $34.1 billion.
This is despite the unification of the naira and the introduction of a managed exchange rate float.
A cursory review of the data shows this is the largest half-year drop since 2015 when the external reserves went from $34.4 billion at the end of the year to $28.1 billion by the end of the first 6 months of June 2015.
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