Devaluation calls loom as reserves fall below $40 billion

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Nigeria’s foreign exchange reserves fell below $40 billion for the first time in 23 months, as the country’s crude oil earnings remain under pressure in the international market, while the apex bank sustains its currency defence efforts. While the yields on fixed-income securities have relatively been pressured in recent times, the monetary authorities may need to tweak the rates to attract foreign investors, to shore up the depleted reserves. cause panic demand by investors, causing a renewed exchange rate pressure.

Meanwhile, it would be a busy week for the policymakers and the economy, as the Monetary Policy Committee of the Central Bank of Nigeria (CBN), digests the meaning of the third quarter (Q3) growth at 2.28 percent, current account balance for Q3, and inflation trends, to reach a decision on benchmark interest rate today. Specifically, the report on Gross Domestic Product (GDP) in Q3, showed that despite a positive contribution from the non-oil sector, it was still weak.

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