Nigeria’s External Reserves Hit $27.2bn

7 years ago

Nigeria’s External Reserves Hit $27.2bn

Nigeria’s foreign exchange (forex) reserves have increased to $27.223 billion as at January 16, 2017, according to latest figures on the Central Bank of Nigeria’s (CBN) website.

The growth in the reserves, derived majorly from the proceeds of crude oil sales represented an increase by $1.380 billion or 5.3 per cent in the last 17 days, compared with the $25.843 billion that it was as at December 30, 2015.

It was also indicative that the drop in militancy in the Niger Delta and rising oil exports led to the accretion in the forex reserves.

Oil prices settled up on Monday, as Saudi Arabia’s commitments to reducing production offset a report forecasting U.S. output would again rise this year.

Benchmark Brent crude oil LCOc1 was up 41 cents a barrel, or 0.7 percent, at $55.86 and U.S. West Texas Intermediate crude rose 27 cents, or 0.5 percent, to $52.64 a barrel, on Monday.
With the oil market entering 2017 with prices above $50 per barrel, analysts are optimistic about high prices this year.

Meanwhile, Vice President Yemi Osinbajo tuesday said the country needs to close the gap between the official and black market rates for the naira against the dollar “very soon”, as Africa’s largest economy grapples with inflation and the risks of devaluation.

“The gap between the official and parallel market isn’t helpful,” Reuters quoted Osinbajo to have told reporters at the World Economic Forum in Davos.

“If you look at the economic recovery and growth plan, it is the expectation that this is a conversation we are having with central bank.”

The naira’s official rate, controlled by the government is currently at N305 to the dollar since it was devalued in June. But that is still 40 percent stronger than rates on the parallel market, about N497 to the dollar, a gap that is discouraging investment from overseas and leaving Nigeria starved of foreign currency.

The official and black market naira foreign exchange rates will be “unified” this year, but there is no time frame for when it could happen, said Osinbajo.

Financial institutions, among others, have argued that Nigeria must allow its currency to float freely to solve its foreign exchange woes, a measure which has met opposition from President Muhammadu Buhari.

Nigeria’s lack of dollars has been exacerbated by a crunch in oil production, caused by militant attacks on facilities in the crude oil-rich regions in the South-east Delta region, and low global prices for oil, on which the government depends for 70 percent of its revenues.

“The current output is 1.7-1.8 million barrels per day and it could improve very quickly as soon as we sort out things in the Delta,” Osinbajo said.

In an effort to end militant attacks and remain “actively engaged”, Osinbajo travelled to the Niger Delta region for talks with militants earlier this week.

Additionally, Nigeria aims to sell Eurobonds worth $1 billion in March, said Osinbajo, rather than February as originally hoped, which could help refill the government’s coffers.