Nigeria’s external reserve is expected to soar to a 30-month high of $32 billion by the end of August.
According to data from the Central Bank of Nigeria, CBN, the external reserve climbed to $31.55 billion on August 16, from $30.84 billion on July 31, representing 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 foreign 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.
The steady upward trend in the reserve especially since July 7, 2017 was driven 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.
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, Financial Vanguard investigations revealed.
Further analysis revealed that $925.38 million was traded in the window from Monday to Friday last week.
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.
