https://www.wikifx.com/en/newsdetail/202301118354185324.html?gip=TGme13

Abstract：On Friday, the naira decreased against the dollar on all foreign currency (FX) markets as squeezed external reserves plummeted by $3.42 billion from now until 2022.

　　On Friday, the naira decreased against the dollar on all foreign currency (FX) markets as squeezed external reserves plummeted by $3.42 billion from now until 2022.

　　At the Investors and Exporters (I&E) forex window, Nigeria's official foreign exchange market, the dollar was quoted at N461.67 at Friday's close as opposed to N461.50 on Thursday, a 0.04 percent loss for the Naira.

　　The unofficial market, sometimes known as the black market, saw a 0.27 percent (N2) depreciation of the local currency on Friday, falling to N742 per dollar from N740 on Thursday.

　　Data from the Central Bank of Nigeria (CBN) showed that Nigeria's external reserves, which provide the CBN with the means to defend the Naira, decreased by 8.44 percent annually to 37.08 billion as of December 30, 2022 from the $40.50 billion reported at the start of 2022.

　　In a recent research, analysts at FBNQuest stated that until 2022, the trend in gross official reserves was decreasing.

　　The key source of FX accretion to the official reserves, foreign exchange input from crude oil sales, was basically nonexistent last year, according to the report.

　　The official foreign exchange receipt from crude oil sales into Nigeria's official reserves has continuously decreased from over US$3.0 billion monthly in 2014 to an absolute zero dollars, according to Godwin Emefiele, governor of the Central Bank, who made this statement in November 2022.

　　He stated that there was a severe squeeze on the Nigerian foreign exchange market, which was putting pressure on reserves and suppressing the value of the naira.

　　On the basis of the balance of payments for the 12 months ending in June 2022, total reserves at the end of December 2022 were sufficient to support imports of goods for 8.4 months and 6.4 months, respectively.

　　The analysts noted that in order to get a “more true picture,” the gross reserve figure (and the import cover) needed to be adjusted for the backlog of delayed external payments.

　　The CBN was managed to keep the naira relatively constant on the official market despite the pressure from demand, the article claims. The main method used to do this was FX supply rationing.

　　Despite the US Federal Reserve's hefty interest rate increases last year, the naira only lost around 9 percent of its value against the US dollar. According to the research, this is in contrast to how most other currencies have performed globally.

　　According to the data, the Egyptian Pound lost value relative to the US dollar by 36% last year. The Ghanaian Cedi fell even further, by more than 60%.

　　The analysts predicted that the currency will undergo a significant adjustment this year as a result of the downward pressure on the external reserves.

　　By the end of 2023, according to FBNQuest, the gross official reserve balance will be roughly USD36 billion. The minor drop from levels at the end of 2022 is primarily attributable to the oil production's gradual improvement as a result of an increase by the security agencies. The proposal by the Federal Government (FG) to end fuel subsidies by June 2023 will also receive approval, according to the article.