Oil prices boost Nigeria’s external reserves, as Naira gains 5.5% in official market
By Sodiq Adelakun
External reserves have risen by 0.21 percent in the last three weeks, following increased oil production and prices. The price of Brent crude stood at $88.41 as of October 25, 2023.
Data from the Central Bank of Nigeria (CBN) showed that foreign reserves rose to $33.29 billion as of October 24, 2023 compared to $33.22 at the beginning of the month on October 3, 2023.
This is as the the Nigerian Naira experienced mixed results against the US Dollar in the foreign exchange market.
The currency gained value in the Nigerian Autonomous Foreign Exchange Market (NAFEM), but lost value in the peer-to-peer (P2P) and black market segments.
In the official segment of the market, the Naira improved by 5.5% or N46.67 to trade at N801.10/$1, compared to the previous session rate of N847.77/$1.
The supply of forex into the spot market improved during the session, contributing to the Naira’s better performance.
Transactions worth $100.18 million were executed in the midweek session, 13.7 percent or $12.08 million higher than the $88.10 million carried out on Tuesday, according to data from the FMDQ Securities Exchange.
However, foreign exchange transactions conducted outside Nigeria’s official FX window will soon incur excise tax penalties, which could lead to further changes in the market.
This is one of the 20 recommendations put forward by the Presidential Fiscal Policy and Tax Reform Committee, established by President Bola Tinubu to evaluate and provide guidance on reforms aimed at shaping Nigeria’s fiscal policy and tax system.
In the P2P section, traders exchanged their local currency for the American currency at N1,253/$1 versus N1,230/$1, indicating that it lost N23 during the session.
In the same vein, the domestic currency depreciated against the greenback in the parallel market yesterday by N25 to sell at N1,260/$1, in contrast to Tuesday’s exchange rate of N1,235/$1.
But the Nigerian currency gained N29.65 against the Pound Sterling in the official market to quote at N974.45/£1 versus the previous day’s N1,004.10/£1 and on the Euro, it appreciated by N25.19 to close at N849.07/€1 versus N874.26/€1.
Meanwhile, the digital currency market saw Bitcoin (BTC) maintaining its stellar performance on the news about BlackRock filing for a spot BTC ETF in the US as observers take an eventual approval by the US Securities and Exchange Commission (SEC) as a near certainty that could unleash a wave of fresh demand for the asset.
The crypto jumped by 1.9 per cent on Wednesday to sell at $34,476.63, as Solana (SOL) soared by 8.1 per cent to $32.52, and Dogecoin (DOGE) surged by 3.1 per cent to $0.0686.
Further, Cardano (ADA) rose by 0.6 per cent to trade at $0.2806, and Ethereum (ETH) grew by 0.1 per cent to $1,784.27, while the US Dollar Tether (USDT) and Binance USD (BUSD) closed flat at $1.00 apiece.
However, Binance Coin (BNB) depreciated by 1.3 per cent to sell for $222.55, Ripple (XRP) recorded a 0.7 per cent slip to trade at $0.5546, and Litecoin (LTC) declined by 0.4 per cent to $68.67.
