Nigeria’s foreign exchange reserves are dwindling at a rapid pace, sparking concerns over the Central Bank’s strategy to prop up the naira amidst promises of a more flexible exchange rate.

In a span of just under a month, from March 18 to April 12, liquid reserves plummeted by 5.6%, plummeting to $31.7 billion, based on Bloomberg’s analysis of data from the Central Bank of Nigeria. This significant decline marks the most substantial drop over a comparable period since April 2020.

The alarming rate of depletion indicates a departure from previous trends, heightening worries about the sustainability of Nigeria’s forex reserves. The central bank’s efforts to stabilize the naira, which had been on a downward spiral against the dollar, seem to have come at a considerable cost. Despite pledges to allow the currency to float more freely, the bank’s interventions to shore up the naira appear to have drained significant reserves.

Observers fear that the rapid decline in reserves could signal a rougher economic path ahead for Nigeria. Questions arise regarding the effectiveness of the central bank’s policies in managing the naira’s value and ensuring stability in the forex market.

As the country grapples with economic challenges exacerbated by the COVID-19 pandemic and fluctuating global oil prices, the depletion of foreign exchange reserves adds another layer of uncertainty to Nigeria’s economic landscape.