External Reserves Gain $189.41m In Week, Near $40bn
Nigeria’s gross external reserves rose minimally by 0.48 per cent or $189.41 million in the first week of July to the highest point in about two months, insidebusiness. ng can report.
Analysis of data from the Central Bank of Nigeria (CBN) website shows that reserves rose slightly from $39.16 billion on June 30 to $39.34 billion on July 7, maintaining a $39 billion mark since June 27.
The reserve was highest at $40.52 billion since the beginning of the year, even though the CBN Governor, Godwin Emefiele, promised to rev up the reserves to surpass the $42 billion mark by the middle of this year.
Analysts are, however, of the view that the current uptick in the external reserves could be attributed to the positive rally witnessed in the crude oil market since the start of the year.
Crude oil price which stood at $76.25 at the beginning of the year has risen by 57.78 per cent to $120.31 as of July 7, data from the CBN shows.
The seemingly rise in the gross external reserves is also being attributed to the recent announcement by the Debt Management Office (DMO) of proceeds from its recently listed $1.25 billion FGN Eurobond issued in March this year on the Nigerian Exchange Limited (NGX) and FMDQ Exchanges respectively.
The proceeds targeted to finance capital projects contribute to the increase in external reserves. But, the reserves had shed $1.18 billion since the beginning of the year, after opening at $40.52 billion.
“This is attributed to the weak accretion to the reserves from exports and the high cost of importation of refined petroleum products,” the CBN stated in its communiqué for the last Monetary Policy Committee (MPC) meeting held in May.
“I am worried that Nigeria is not able to benefit maximally from the current upsides in the global oil market. We were not only unable to ramp up our production levels to meet the OPEC quota, but no accretion to foreign reserves is also taking place, and government deficit and public debts are going north at a time we should be writing down our debt profiles and even building up a buffer for the inevitable raining days ahead,” one of the members of the MPC, Adeola Adenikinju, stated in his note.
Meanwhile, Researchers at Cowry Asset Management say the current data on the CBN website portends that “the accretion of the external reserves will continue to be hampered by several factors such as exchange rate pressures if there is, perhaps, no timely and appropriate intervention by the apex bank to defend the naira across various FX windows and in the face of liquidity crunch which may force FX users to pay the premium for the greenback and in the long run increase the FX spread across markets.”
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