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Nigeria’s foreign reserves fell to $29.13 billion on December 29th, as latest figures published by the Central Bank of Nigeria (CBN) have shown. This is a 3 percent from $29.92 billion recorded as at November 30th.

Low oil prices continue to reduce government as crude oil remains the major source of Nigeria’s foreign exchange, accounting for 75 percent of government revenues.

On a year-to-date basis, Nigeria’s foreign reserves have fallen by 16 percent from $34.47 billion reported on January 5th to the latest figure.

Due to low oil prices, which have declined by over 60 percent since May last year, the CBN has resorted to unconventional measures to protect the country’s dwindling foreign reserves. In June, the apex bank banned the sales of foreign exchange for the importation of about 41 goods and services. More recently, the CBN has imposed stringent measures on banks and bureau de changes, which sell foreign exchange to businesses and individuals.

As a result of the CBN’s forex polices, the naira has fallen to record lows on the parallel market, closing at 262 naira per dollar as at December 30th. The official naira rate has been pegged at 197 naira per dollar.

During a presidential media chat on Wednesday, President Muhammadu Buhari backed the CBN’s forex policies and ruled out any devaluation of the naira.

“Don’t talk about foreign reserve. It has disappeared. The situation now is aggravated by downturn in oil prices, down now to 35, 36 dollars a barrel,” Buhari said.

“I do not support devaluation . . . In developed countries, when they devalue, their currencies become cheaper, their goods and services become cheaper. But in Nigeria, we import even toothpick. If we devalue, what are we sending out?”

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst