CBN defended Naira with nearly $1bn in Q1, but the pressure remains
The Central Bank of Nigeria (CBN) has disclosed a 2.39 percent decline in the country’s foreign reserves in the first three months of 2021.
CBN disclosed this in its latest data published on its website and obtained by Ripples Nigeria on Saturday.
According to the data, Nigeria’s reserves closed at $39.5 billion in the month of March, while $40.5 billion opened the new year on January 4, 2021.
This indicates a decline of $971.3 million with the reporting period.
Ripple Nigeria understands that the decline was due to the top bank’s ongoing intervention plan in the country’s foreign exchange market.
For a long time, the CBN has been supplying dollars to meet foreign exchange demands and help stabilize the currency market.
ALSO READ: Naira appreciates as CBN withdraws $975.7 million from external reserves to protect currency
For context, CBN’s October 2021 economic data shows as much
$16.7 billion was invested in the official forex market in the first 10 months of 2021.
The highest amount during this period was in June 2021, where CBN pledged a total of $2.24 billion to help meet demands from investors and exporters and help maintain the value of the naira.
Despite this huge commitment, there is a huge gap between the demanded foreign exchange and the foreign exchange currently available in the market.
Some banks recently announced a reduction in the monthly spending limit from $100 to $20, while some temporarily suspended the use of naira-denominated debit cards for international transactions.
In April 2015, the spending limit on Naira-valued cards for international transactions was $50,000 per person per year, or $4,166.7 per month.
“Please be informed that the monthly spending limit for international transactions on your Naira-denominated debit card has been temporarily suspended. Alternatively, you may enjoy a higher daily transaction limit by using our foreign currency denominated debit card.” which is available in US Dollar, Pound and Euro variants,” Ecobank said in a note to its customers.
In addition, Zenith Bank Plc announced on March 10 that it had temporarily suspended the use of its Naira card for international ATM cash withdrawal and POS transactions.
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