The Nigerian foreign exchange reserves increased by $595 million to $26.20 billion, according to the latest data from the Central Bank of Nigeria. This is its highest in a month.
This was after the Naira traded at a record low of 414 against the US dollar on Sunday at the parallel market before retreating to 412 on Monday.
According to Mr. Sewa Wusu, the Head of Research and Investment Advisory at SCM Capital Limited, a lot factors could lead to the increase in the external reserves.
He explained “The increase in international crude oil prices penultimate week on the heels of production freeze expectations from OPEC may have raised the external reserves position. Although we are currently witnessing production cut due to the militants’ vandalism, the lag effect of this crude price increases may have raised the reserves.”
External reserves which stood at $26.21 billion as of July 28, declined to $25.6 billion by August 24, the CBN data showed.
The decline was largely due to the efforts of the CBN to boost liquidity at the interbank market and support the ailing naira by selling dollar to ease the economic gridlock created by the forex scarcity.
However, the reserves had plunged by over 10 percent from a year ago when it was $29.7 billion.