The nation’s foreign exchange (forex) reserves have recorded an increase of $860 million after a four-week persistent and gradual gain despite pressure at both the interbank and parallel markets.
The development now brings the stock of the reserves to $25.36 billion, up from $24.49 billion in the corresponding period of last month, representing about 3.5 per cent rise.
Forex reserves are money or other assets held by a central bank or other monetary authority, which can be used to pay for a country’s liabilities. The reserves also include the various bank reserves deposited with the central bank by other banks.Countries use the forex reserves to support their own currency, while also helping them guarantee their exchange rate.
Within the period, the Central Bank of Nigeria (CBN), the lender of last resort, said it offered real sector operators – manufacturers and other strategic actors in the economy, access to about 7,792 requests for foreign exchange valued at over $867 million through the inter-bank window.
A summary of the forex utilisation for the month of October 2016 indicated that the raw materials sector received the highest allotment, getting access to foreign exchange valued at $355.7 million or 40.99 per cent of the total value of Forex utilisation for the month put at $867.8 million.
By the resurgent reserves profile, a new hope is rising over the country’s ability to raise its forex defence strategy to enable it provide for the huge demand and support the ailing Naira value that has long eroded due to lack of forex.
The forex reserves have also recorded an increase of $1.46 billion in the last two months, from a low of $23.9 billion in October to $25.36 billion presently.
The new level represent a four-month record high since end of August 2016, after gaining a persistent daily average growth of about 2.8 per cent from the end of October till date.
In the same period in November, the reserves recorded an increase of $589 million, after weeks of consistent and gradual gains, despite demand pressure, bringing it to $24.49 billion, up from $23.91 billion. That was a 2.5 per cent rise.
It also closed up a two-month decline to $247 million, after losing $836 million between September ($24.74) and October ($23.91).The international price of crude oil has remained relatively stable in recent weeks, although the country’s production has been below expectation down to 1.6 million barrels daily due to the activities of militants.
However, price stability – slight improvement in capital importation and the country’s management of the foreign exchange policy through the CBN has also contributed to the assessed reserves’ accretion.
Besides, earlier in November, African Development Bank delivered $600 million facility, out of the $1 billion pledge to Nigeria, which may have aided the reserves recovery. In December, the same bank offered Nigeria a $250 million grant for youth initiative.