According to the latest data released by the Central Bank of Nigeria on Monday, the nation’s External Reserve dropped by $1.457 billion in the month of September. Recall that the external reserve was reportedly $45.838 billion at the end of August 2018, meanwhile, as at 27th September, 2018 it had declined to $44.380 billion.
Going by the previous release data by the CBN, the reserve had maintained this downward trend in recent months, for example in the month of August, it fell by $990.98 million, when it dropped from $47.11 billion in July to $46.128 billion on 23rd August, 2018.
Tradelines team believed that since oil remained the nation’s major revenue earner, fluctuations on both price and production of same will definitely tell on the external reserve level. You will recall that while the reserve was on the upward trend, oil price was on the increase and production was constant. Another fundamental factor responsible for the decline is the heightened political uncertainty that had currently threatened foreign investment in the country. This of course had led to the exit of key funds previously lubricating the economy.
Nevertheless, we are of the opinion that this should be a wakeup call for the Nigerian government, policy encouraging Fx inflows in various other sectors should be strictly observed, also more concentration should be targeted towards the Information Technology (IT) arm of the economy. As we have fondly noted in most of our reports, the beauty of the major denting fundamental around the country is that, the end can be easily predicted, hence positioning towards the definite boom at the end of the politicking season is strictly recommended.