Nigeria’s forex reserves gained $519.17 million in two weeks amid improved crude oil revenue and remittances.
The latest figures from the Central Bank of Nigeria (CBN) on Thursday showed that the reserves increased from $34.46 billion in March 19 to $34.98 billion as of April 6.
Analysts have predicted that the rising global oil price will benefit Nigeria as it will increase the country’s export earnings and forex reserve.
This is because crude oil earnings account for over 70 per cent of total government revenue and 90 per cent of forex reserves.
The analysts at Financial Derivatives Company Limited (FDC) in their analysis of the state of the economy said the Central Bank of Nigeria will be able to utilize the forex to reduce pressure on naira.
Brent Crude, against which Nigeria’s crude oil is benchmarked was $62.78 per barrel as of 3pm on Thursday, as tight supplies are forcing a global drain in inventories.
FDC said, “OPEC+ keeping its output cuts through April, tensions in Saudi Arabia and lower United States crude inventories will support prices. Brent at $68pb is 70 per cent higher than the 2021 budget benchmark ($40pb).
“This would boost oil revenues and slow the pace of external reserves depletion in the near term. Also, increased forex inflows could taper currency pressures and boost the value of the naira.
Increased oil export earnings, according to FDC, will also help the government to bridge it budget deficit.
“A boost to reserves would improve the CBN’s ability to support the naira and strengthen the government’s buffers. Oil prices will maintain the upward trend, and this will support the federal government in reducing its fiscal deficit, estimated at N5.6trn while at the same time boosting external reserves,” the analysts said.
In order to shore up Nigeria’s forex earnings, the Central Bank of Nigeria (CBN) had last ,month introduced the Naira 4 dollar initiative which began on March 8, 2021.
Under the scheme that will end on Saturday, May 8, 2021, all recipients of Diaspora remittances through CBN’s International Money Transfer Operators (IMTO) are being paid N5 for every $1 received as remittance inflow.
The CBN described the initiative as an incentive for both senders and recipients of Diaspora remittances, and would sustain and encourage increase in inflows of Diaspora remittances into Nigeria.