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Nigeria’s foreign reserves dropped by $111 million (N22.1 billion) in three trading days even as the International Monetary Fund (IMF) chief Christine Lagarde told Nigerian lawmakers on Wednesday that the country’s immediate policy priority should be to strengthen its external position.

According to figures released by the Central Bank of Nigeria (CBN), Nigeria’s foreign reserves fell to $28.96 billion as at January 6th from $29.07 billion reported on December 31st, 2015.

The CBN has maintained foreign exchange restrictions amid a protracted slump in oil prices. The naira has been devalued by 25 percent over the last year, yet the pressure on the naira has not eased as the country faces continued oil revenue shocks.

On a year-on-year basis, Nigeria’s foreign reserves fell by 15 percent in 2015, dropping to $29.07 billion on December 31st, 2015, compared with $34.52 billion recorded on December 31, 2014.

The apex bank has resisted calls by investors to further devalue the naira, choosing to use measures that restrict forex in order to protect the country’s dwindling foreign reserves. In June last year, the CBN banned the sale of foreign exchange for the importation of some items. More recently, the CBN has imposed stringent measures on banks and bureau de changes, which sell foreign exchange to businesses and individuals.

But during her visit to Nigeria, Lagarde said the IMF would prefer a flexible exchange policy.

Speaking to the National Assembly, she said Nigeria can “avoid the need for costly foreign exchange restrictions - which should, in any case, remain temporary."

“To be clear, the goal of achieving external competitiveness requires a package of policies including business monetary, flexible exchange rate and disciplined fiscal policies,” the IMF chief said.

The federal government has backed the CBN forex policies while promising that optimising public finance, fighting corruption and increasing tax revenue can help reduce the pressure on the naira.

The government has also said it will remove fuel subsidy, increase domestic refining of petrol and increase infrastructure spending as indicated in the 2016 budget proposal which it hopes should restore investor confidence.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst