Nigeria’s External Reserves climb to $46 billion - BUSINESSDAY
Rallying oil prices, sale of Eurobonds and improved dollar liquidity from portfolio inflows into Nigeria have rubbed off on its dollar reserves which has touched the $46 billion mark.
Data from the Central Bank of Nigeria (CBN) revealed the reserves grew by about $3.2 billion between February and March 2018. The reserves at the beginning of 2018 stood at $39.3 billion then rose to $42.8 in February before hitting the new high of $46 billion.
Confirming the figures, the CBN Acting Director, Corporate Communications Department, Isaac Okorafor attributed the continued accretion to the country’s reserves to the Bank’s effort at vigorously discouraging unnecessary importation and reducing the nation’s import Bill; inflow from oil and non-oil exports, as well as the huge inflows through the investors and exporters window of the foreign exchange market, which he said had attracted over $33 billion since April 2017, when it was created.
Brent crude, the benchmark grade for Nigerian oil, increased to 2.96 percent to $65.49 per barrel Sunday, 21 percent higher than 2017’s average of $53.7 per barrel and 19 percent higher than the 2018 budget benchmark.
“Bank’s interventions in the foreign exchange window had also helped to moderate the pressure on the FOREX reserves by sustaining liquidity in the market and boosting production and trade,” Okorafor said.
Okorafor also noted that the CBN policy of restricting access to FOREX from Nigeria’s foreign exchange market to importers of some 41 items had made a huge impact on the status of Nigeria’s reserves and boosted the supply of local substitutes for imported goods, created jobs at home and enhanced the incomes of farmers and local manufacturers.
Recall that earlier in November last year, the apex bank Governor, Godwin Emefiele had projected that Nigeria’s external reserves would hit the $40 billion mark in 2018.
Meanwhile the total value of trades recorded for the week-ended March 2, 2018 in the Investors’ & Exporters’ (I&E) FX Window, stood at $1.56 billion. This represents an increase of 69.57 percent ($0.64 billion) when compared to the $0.92 billion traded in the previous week, bringing the total value traded at the Window year to date to $10.71 billion.
Also, the CBN official rate fell by ₦0.05 to close at ₦305.80/$ as at March 9, 2018, indicating a 0.02 per cent appreciation when compared to ₦305.85/$ recorded the previous week-ended March 2, 2018.
In the Bureau de Change (BDC) market, still at the end of reporting week, the exchange rate fell by ₦0.50 to close at ₦362.50/$, indicating a 0.14 per cent appreciation when compared to ₦363/$ recorded in the previous week-ended March 2, 2018.
For the reporting week-ended March 9, 2018, the Naira depreciated at the I&E FX Window, losing ₦0.22 as the rate opened the week at ₦360.10/$, and closed at ₦360.32/$, resulting in a spread of ₦2.18/$ between the BDC market rate and I&E FX Window rate.
On the other hand, the spread between the BDC market rate and the CBN official exchange rate fell by ₦0.45 to close at ₦56.70/$, indicating a 0.79 per cent decrease from the ₦57.15/$ recorded in the previous week.
In the OTC FX Futures market, for the week-ended March 9, 2018, $105.04 million worth of OTC FX Futures contracts were traded in 6 deals, compared to the previous week’s total of $108.68 million traded in 15 deals.
Foreign inflows have responded to rallying oil prices and improved dollar liquidity in Nigeria, as inflows through the CBN turned positive in 2017 for the first time since 2012, according to data compiled by BusinessDay and sourced from a report on the apex bank’s website that put net inflows at $12 billion.
Despite these, the economy remains at risk to external shocks as another oil price rout could put paid to gains recorded thus far, even as economic growth below 6 percent is likely to elude Africa’s most populous nation which produces people at the rate of 3 percent annually.