Nigeria’s foreign exchange reserves rose to $30. 038billion as of March 8 to record its highest level since the November 2015 figure of $30.049 billion, latest data from the Central Bank of Nigeria, CBN, has shown.
This is even as the nation’s apex bank in the last four weeks injected a total amount of $1.237billion into the foreign exchange market.
While comparing the latest with the corresponding period in 2016, it showed that the reserves. have jerked up by $2.156 billion, the CBN statistics has revealed.
It is worthy of note that Nigeria’s dollar reserves have increased by 15.02 percent since the start of the year, following a steady increase since January 5, 2017, which eventually hit $30.038 .995,233 billion on Thursday, March 8, 2017.
Although, the central bank has not given reasons for the sharp increase but financial experts have attributed the rise to the recovery in crude oil prices which have soared to $55 per barrel in the global market, following the output cut deal agreed between OPEC and Non-OPEC members on January 1, allowing the CBN to boosts its foreign reserves.
Recall that the last time the reserves crossed above $30 billion mark was in July 2015, when it went as high as $31.63 billion in August 2015 before it began to decline.
As of mid-February this year, the nation’s external reserves rose by $4.7billion or 20 per cent in three months.
The figure, however, further increased from $24bn on November 9, 2016 to $28.7billion on February 9, 2017.
The data also showed that within two months, the reserves increased by $3.8biollion or 15.3 per cent from $24.9billionn recorded on December 9, 2016 to $28.7bn on February 9, 2017.
The reserves increased by $2.9billion or 11.2 per cent since the beginning of this year till mid-February. Specifically, the external reserves rose from $25.8billion on December 30, 2016 to $8.7billionn on February 9, 2017.
The continuous increase in the reserves has however, positioned the central bank to lived up to its promise to provide a sustained input of forex into the nation’s economy for Nigerians who have legitimate use for it.
In the few weeks of the apex lender’s revised forex policy, it has made a positive impact on both banks and importers, as the uniqueness of the wholesale forwards was that banks were allowed to use their winnings from auctions to fund matured obligations to meet letters of credit remittances, extinguish bills for collection and other forex demands.
The CBN spokesperson, Mr. Isaac Okorafor, has explained that importers now have cheaper and easier sources of forex.
According to him, “With this development, importers who had hitherto been using bills for collection will now experience relief instead of having to patronize other more expensive sources.”
Just last week, the bank offered another $100 million for wholesale requests, out of which $70 million was sold to meet requests for business/personal travel allowances, BTA/PTA.
This represents a fourth consecutive week of dollar injection into the market following a $500 million intervention 3 weeks ago, $270 million a fortnight ago and $367.13 million last week.
Speaking on the regulator’s commitment to ensure that forex scarcity is a thing of the past, Mr. Okorafor said: “The Bank remains resolute in ensuring that it supplies enough forex to genuine customers of deposit money banks and increase liquidity in the market.”
Although, some concerned industry experts have said that the revised forex policy may not be sustained but the CBN has promised to remain resolute in ensuring that it supplies enough forex to genuine customers of Deposit Money Banks and increase liquidity in the market.
Speaking exclusively to our correspondent on the telephone in Lagos, Dr. Uche Joe Uwaleke, an Associate Professor, Nasarawa State University, said that the CBN intervention is being made possible due to the fact that the foreign reserves have been on the rise recently and the accretion in the reserve is what has empowered the central bank to be able to intervene continuously.
He explained that the accretion has been a function of the increase in the international oil price, as well as the improvement in output in the wake of the relative peace in the Niger Delta region.
According to him, we have had improvement in the oil revenue, which has also translated in the increase of the foreign reserves, standing around $29billion now.
“So, the CBN is now in a convenient position to supply forex to the market, which is why it has said that banks should open outlets across the airports and should even have special teller points to attend to those who are in need of Personal Travel Allowances (PTA) and to those who also need forex for school fees abroad.
Dr. Uwaleke, added that the sustainability of the apex bank intervention of course remain a function of the oil revenue, “because our economy depends substantially on oil revenue, so if the oil price continues to perform largely above the budget reference price, which is what is happening now trading more than $50 per barrel and if output also continue to improve because presently I understand it is almost two million barrels per day.”
His words: “With fovourable condition in the international oil market, I strongly feel that the CBN will continue to spend this intervention and the intervention is in the interest of the economy.
“Because CBN has proved that most of the demand in the forex market are speculative, especially at the parallel market and the proof is that, at one point they made available $500millon and only $370million was taken up. So, that tells you that part of that demand is being influenced by speculators”, he explained.