Naira slows to N1,050/$1 as foreign reserve hit 7-year low

The naira hit the brakes on some of its gains yesterday and the past few weeks selling at N1,050/$1 to the dollar at the parallel market, as the external reserves of the country declined to their lowest level in nearly seven years. The 30-day moving average of the external reserves currently stands at $32.612 billion, according to the latest data provided by CBN, the lowest level that the country has seen since September 29, 2017, when the reserves depleted to $32.49 billion. Between then and now, the reserves had achieved a high point of $47.86 billion on May 15, 2018. Having appreciated from N1,130/$1 to N1,000/$1 to the dollar on the streets on Monday, the value of the naira depreciated to N1,050/$1 on Tuesday. This is as economic analysts say using the foreign reserve to defend the naira, though an inevitable move in the face of the massive depreciation of the local currency, cannot be sustained over the medium to long term. The 30-day moving average of the external reserves had depleted by $1.837 billion, or 5.3 per cent, between March 18, 2024, and April 12, 2024, following several interventions in the foreign exchange market by CBN to stabilize the naira. The CBN’s approach, which has contributed to the naira’s appreciation to N1000/$1 to the dollar at the parallel market and its stability around N1,136/$1 to the dollar at the official window, involves reinstating discounted sales to Bureau de Change operators to enhance market liquidity and intervening in the official exchange market. Latest data on the website of the apex bank showed that compared to $34.449 billion which the reserves were as of March 18, the highest point so far this year, it had continued to deplete with occasional appreciations to stand at $32.612 billion by April 12, 2024