- Foreign Reserves Near Three-month High at $30.8b
The foreign exchange reserves have risen to an almost three-month high of $30.74 billion, latest Central Bank of Nigeria (CBN) data showed.
The dollar reserves grew 1.62 per cent from a month earlier. The CBN did not provide a reason for the increase.
The foreign reserves rose by $7 billion in six months to hit $31 billion at the end of April this year. The increase has restored the total to a level last seen in August 2015.
According to FBN Capital Research, the reasons for the recovery are the disbursement of $600 million by the African Development Bank (AfDB) last November and the recent sale of N1.5 million Eurobond.
“There has also been a significant recovery in oil production over the period. With less certainty we can speculate about improved forex management and possible swap transactions,” it said.
The research firm said the positive surprise was due to the upward swing in reserves, since the CBN stepped up its forex sales in early March.
“The steady accumulation makes it less, not more, likely to adopt the forex reforms sought by the market. There is no sign that the CBN plans to slow its sales, which for wholesale transactions alone are close to $3 billion: rather, it launched its latest window (for investors and exporters) only last month,” the report said.
It said the macroeconomic damage from the latest period of oil price weakness, which is approaching three years, could have been manageable if a fiscal buffer against external shocks had been functioning.
“Legislation passed in 2011 created such a buffer, Nigeria’s own ring-fenced sovereign wealth fund, but the opposition of state governors has prevented its effective operation. The accumulation from 2011 through to the start of the oil price slide in August 2014 would have been substantial,” it added
Meanwhile, the CBN yesterday offered $100 million in wholesale auction at the inter-bank forex market and intervened in the Small and Medium Enterprises (SMEs) and invisible segments, with the sum of $50 million and $45 million, respectively.
Confirming the figures, the CBN Acting Director, Corporate Communications, Isaac Okorafor reiterated that the bank’s intervention was in line with its commitment to sustain liquidity in the market to meet genuine requests as well as deepen flexibility in the foreign exchange market.
Monday’s sale follows the major intervention, last Friday, to the tune of $462,336,426.74, comprising $267.3 million for the Retail Secondary Market Intervention Sales (SMIS), $100 million for wholesale interventions, $50 million for the SMEs forex window and $45 million for invisibles.
Okorafor had said last week that the CBN leadership was quite impressed by the positive impact its current foreign exchange management was having on the manufacturing sector, agriculture and economic activities in general across the country.
He said the CBN would not continue working on achieving the objective of convergence between the exchange rates at the Nigeria Autonomous Foreign Exchange (NAFEX) and the Bureau-de-Change segments of the market, even as he assured proper surveillance of the forex market to guarantee transparency in the sale of foreign exchange.
