JP Morgan has put Nigeria’s foreign reserve at a paltry $3.7 billion, sufficient just for one month of export.
This is even as a recent CBN audited account showed Nigerian foreign reserve was about $14 billion, sufficient to finance at least three months of exports, a minimum requirement in international trade.
Even before this audit report, CBN data showed Nigeria’s foreign reserve was around $34bn.
JP Morgan stated this in its report on Nigeria entitled “Nigeria: Reform pause rather than fatigue”.
The bank attributed the low reserve to larger currency swaps and borrowings against the FX reserve which netted off Nigeria’s Forex accruals.
It stated thus, “Based on partial information from the audited financial accounts, we estimate that CBN’s net FX reserves were around $3.7bn at the end of last year, from $14.0bn at the end of 2021.”
The bank clarified it arrived at the $3.7 billion by making some assumptions which if incorrect will change the figure in their estimates.
“An addition of US$5.0bn in IMF Special Drawing Rights (SDR) to external reserves to arrive at total gross FX reserves of US$37.8bn, broadly in line with the 30-day moving average of US$37.08bn previously published on the central bank’s website.”
“adjusting the gross external reserves with three key FX liability lines that include FX forwards (US$6.84bn), securities lending (US$5.5bn) and currency swaps (US$21.3bn); and”
“Estimating currency swaps by backing out FX forwards and outstanding OTC Futures balances from an overall aggregate published in the financial accounts.”