…as Fx intervention drops by 44.02% in April
The Central Bank of Nigeria (CBN) has disclosed that the nation’s foreign reserves appreciated to $47.57 billion as at May 3, 2018.
The foreign reserves continued on a steady increase in 2018, attributable to increased global oil prices and stable production that continued to shore up the reserves and support the CBN’s interventions in the market.
The foreign reserves gained $1.24 billion or 2.67 per cent in April to close at $47.49 billion from $46.26 billion it opened in April.
The foreign reserves monitored by CBN appreciated by $7.44 billion in first quarter of 2018.
The foreign reserves opened this year at $38.77 billion to close March 28, 2018 at $46.21 billion, an increase of 19.2 per cent this year.
In February, the foreign reserves added $1.8 billion or 4.44 per cent to $42.92 billion from $40.69 billion it opened while in January, it gained $1.9 billion or 4.95 per cent to $40.69 billion from $38.77 billion it opened in 2018.
According to Nigerian NewsDirect findings, the price of Organization of Exporting Countries (OPEC) daily basket price stood at $70.66 a barrel on May 03, 2018.
Global Oil prices continued to rally above $60 per barrel extended to new heights in 2017 with Brent crude climbing to a level last seen in mid-2015, stoking hopes in the industry that the market has finally turned a corner following a three-year slump.
An oil price recovery has been under way since June last year as crude demand finally starts to outpace supply, with Brent rallying by almost 40 per cent to $61 a barrel, as the global oil glut that had built up over the previous three years starts to draw down.
The CBN spokesman, Mr. Isaac Okorafor, had noted the increase in foreign reserves can be attributable to peace in the oil-rich Niger-Delta region of the country, which resulted into increased oil output and earnings.
He had said with the sustained interventions, the apex bank has been able to push foreign exchange demand away from the parallel market into the formal regulated market.
The CBN Governor, Mr. Godwin Emefiele, had projected that the nation may achieve $60 billion foreign reserves in 2019, should this trend persist.
He said increases in the price and shipment of oil, Nigeria’s biggest foreign-currency earner, and improved investor confidence mean the CBN can build its reserves to $60 billion in the next 12 to 18 months, from $40 billion currently.
“Things are looking up. No one ever thought the price of crude would hit $70 in such a short period of time”, he said during an interview with Bloomberg.
The foreign reserves monitored by CBN opened 2017 at $25.84 billion and grew to $38.73 billion as at December 28, 2017.
In September 2008, Nigeria’s foreign exchange reserves hit $62 billion, with federal government spending $12 billion to settle external debts.
Meanwhile, analysts at Cordros Capital in its monthly report said, “the naira remained stable despite significant decline in the apex bank’s intervention in the FX market by 44.02per cent to $816.18 million, against $1.18 billion in the previous month.
“The Naira against the Dollar closed flat at N362 in the parallel market, with trades remaining within the range of N362-N363/Dollar.
“In the I&E FX window, the naira weakened marginally against the Dollar by 0.12per cent to N360.51, trading within a range of N359.81-N360.54, as against N360.00-N360.57 in the previous month.
“The I&E FX window marked its one-year of operation on April 24th, with a total turnover of $41.80 billion.
“During the month, total turnover on the window increased at a slower pace of 3.49per cent (previously 24.99per cent) to N5.33 billion, with bulk of transactions (63.48per cent) still traded within the N360-369/USD band, while 36.47per cent of trades were executed within the N340-359/Dollar band.”
The Lagos based research firm added that, In the absence of any shocks, it is likely rates remain stable, with the naira trading within current band, as the apex bank persists in its interventions in the FX market – supported by healthy external reserves position.