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External Reserve Heading To 30-Month High Of $32bn

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Nigeria’s external reserve is set to hit a 30-month high of $32 billion by the end of this month. Data from the Central Bank of Nigeria (CBN) showed that the external reserve rose to $31.55 billion on August 16, from $30.84 billion on July 31, representing an increase of $710 million in 16 days.

This trend is expected to persist in the second half of August driving up the reserve to the $32 billion mark.

The external reserve had been below $32 billion since February 2015, 30 months ago, from where it declined steadily to $23.89 billion on October 19, 2016.

Financial Vanguard analysis revealed that from October 19, 2016, the reserve commenced a bumpy but steady upward trend, rising by $7.66 billion or 32 percent to $31.55 billion on August 16 this year.

Also the reserve has risen by $4.56 billion or 17 percent since the beginning of 2017.

The steady upward trend in the reserve especially since July 7, 2017 was buoyed by improved foreign exchange inflow occasioned by positive developments in crude oil price since late last year, dollar inflow from foreign portfolio investors facilitated by the Investors and Exporters (I&E) window introduced in April this year, as well as reduction in dollar sale through CBN’s forex intervention.

The investigations also revealed that about $5 billion has been attracted through the I&E window since inception.

According to the CBN, $4 billion has been traded in the window as at Thursday, August 10, 2017, while data from Financial Market Dealers Quote (FMDQ) showed that about $1 billion was traded in the window from Friday, August 11 to last week Friday, August 18.

Further analysis revealed that $925.38 million was traded in the window from Monday to Friday last week.

Naira appreciates to N359.98 in NAFEX Reflecting the improved dollar supply, the naira last week maintained its upward trend against the dollar in the I&E window, appreciating by N4.8. According to the FMDQ, the indicative exchange rate for the window, known as Nigeria Autonomous Foreign Exchange (NAFEX), dropped to N359.98 per dollar last week Friday, from N364.78 per dollar the previous week.

This translates to N4.8 appreciation for the naira. Thus the naira has appreciated by N7.08 for three consecutive weeks in the window.

However, the naira depreciated by N3 in the parallel market, as the exchange rate for the market rose to N370 per dollar last week from N367 per dollar the previous week, owing to increased demand for dollars in the market.

On the other hand, the CBN sustained its intervention in the foreign exchange market by injecting $364 million into the interbank foreign exchange market.

“The Retail Secondary Market Intervention Sales (SMIS) received the largest allocation of $264.19 million.

The CBN also offered the sum of $100 million to authorized dealers in the wholesale window”, said Isaac Okororafor, Acting Director, Corporate Communications Department, CBN.

In addition to this, the CBN, in a bid to improve foreign exchange availability in the forex market and ameliorate challenges encountered by critical stakeholders, said it will now sell dollars to accommodate payment for port charges to the Nigerian Ports Authority (NPA) and other agencies by oil marketing companies.

A circular signed by the Director, Trade and Exchange Department, Wuritka Dauda Gotring, directed authorized dealers to accept the request for the payments of port charges from oil marketing companies and forward same to the CBN Forex window.