Following the revelation that the overall balance in the foreign reserves may have been over-rated, the value of the Nigerian naira declined on Monday. There have been suspicions that the CBN (Central Bank of Nigeria) falsified its financial records in 2022.
However, the real sum has not been agreed upon by either local or investment foreign financial business, and the monetary authorities remains silent.
The latest report from JP Morgan falls somewhere in the middle, estimating that the balance has likely fallen to $3.7 billion. CardinalStone Partners estimated net foreign exchange reserves settled at $17.4 billion, while Cordros Capital estimated the total balance in the country’s foreign exchange reserves was about $17 billion negative.
Never before have Nigerians and foreign stakeholders been so perplexed by statistics from the apex bank. Due to sporadic FX rate fluctuation in the official market, it is much simpler to estimate the Nigerian naira exchange following each daily gain. There appears to be a barrier level that the naira cannot cross at the current exchange rate of about N740 to the US dollar.
According to FMDQ statistics, the local currency declined from N739.52 to N761.32 in relation to the US dollar on Friday as a result of the apex bank’s ineffective defense against rising demand. As NNPC’s $3 billion loan from the African Import-Export Bank shone light on the dimming FX markets last week, the naira strengthened against the major foreign currency on the market.
MarketForces Africa also gathered that some International Oil Companies sold FX at the investors’ and exporters’ window in addition to the Central Bank of Nigeria’s support for the invisible sales.
Amidst pressures due to sustained scarcity of FX inflows into the economy, the apex bank also brought back the Bureau de Change into the currency market to reduce and monitor spurious demand while its capped FX spread for operators.
It is not however clear if the CBN would conduct weekly FX sales, which was the previous pattern before Godwin Emefiele, suspended governor of the apex bank, stopped BDCs operators alliance, citing terrorism financing and other infractions.
In the parallel market, the naira depreciated by 1.18% to N860 amidst question marks hanging over the true balance in Nigeria’s external reserves. Nigeria’s FX reserves stayed below $34 billion while JP Morgan’s estimate showed that total amount must have dropped to $3.7 billion in December 2022
Today, Brent crude fell 0.32% to $84.53 per barrel, while WTI crude gained 0.07% to $81.30 per barrel. Oil futures were slightly lower, as market participants weighed the implications of a less-than-expected PBOC 1-year LPR cut.
This cut, at 3.45%, was lower than the previous 3.55%. Elsewhere, gold was trading below $1,890 per ounce (-0.11%), influenced by higher US treasury yields and growing expectations of further policy rate hikes in advanced economies.
