Gross reserves slipped to $29.92 billion on Nov. 30, the first time they have fallen below $30 billion since July 13, according to data from the Central Bank of Nigeria. They have fallen by 20 percent since the end of June 2014, when Brent crude prices began a more than 60 percent plunge, hammering the finances of Africa’s largest economy and biggest oil producer.
“With the oil price remaining low, the pressure isn’t dissipating,” said Ikechukwu Iheanacho, who manages 40 billion naira ($202 million) of stocks and bonds for Lagos-based Chapel Hill Denham Securities Ltd. “It raises questions about how long the central bank can continue defending the naira.”
The naira has been all but fixed at 197-199 per dollar since early March after Governor Godwin Emefiele restricted bank access to foreign exchange, even as other major oil exporters such as Russia, Colombia and Angola let their currencies weaken. In June, Emefiele stopped importers of about 40 items, including toothpicks and glass, from obtaining dollars.
Emerging-market investors including Aberdeen Asset Management Plc, AllianceBernstein and Investec Asset Management have sold Nigerian bonds and stocks this year to avoid what they see as an inevitable devaluation, which would cause losses on their holdings in foreign-currency terms. Deputy Governor Sarah Alade told bankers last month that the Abuja-based regulator would further curb dollar supplies because its reserves were running short.
The naira rose 0.6 percent to 197.90 per dollar at 12:48 p.m. in Lagos. Forwards prices suggest the naira will fall 19 percent to 243 in a year.