Nigeria’s external reserves hit 4-year high of $40.3bn

ON JANUARY 29, 2018

As foreign investors inject $5.2bn in 4 weeks CBN intervenes with $986m

By Babajide Komolafe


NIGERIA’s external reserves rose to $40.33 billion last week, the highest in four years. Meanwhile investors have injected $5.23 billion through the Investors and Exporters (I&E) foreign exchange (forex) window in four weeks while the Central Bank of Nigeria, CBN, has intervened in the forex market with $986 million since the beginning of the year. Data from the CBN website showed that external reserves rose to $40.33 billion on Thursday, January 25, from $38.765 billion on December 29, 2017. Thus, the reserves have risen by $1.56 billion this year. The $40.33 billion reserves represent the highest since January 2014 when the reserves dropped to $40.6 billion from $42.84 billion in December 2013. Central Bank of Nigeria, CBN, The steady rise in the external reserve, from July 7 last year, is occasioned by improved foreign exchange inflow occasioned by increase in crude oil price, dollar inflow from foreign portfolio investors facilitated by the Investors and Exporters (I&E) window introduced in April last year, as well as reduction in dollar sale through CBN’s forex intervention. Last week crude oil price rose above $70 per barrel, the highest in three years, while the I&E window attracted $26 billion last year. Last week, CBN Governor, Mr. Godwin Emefiele, projected that the nation may achieve $60 billion external reserves in 2019, should this trend persist. He said increases in the price and shipment of oil, Nigeria’s biggest foreign-currency earner, and improved investor confidence mean the CBN can build its reserves to $60 billion in the next 12 to 18 months, from $40 billion currently. “Things are looking up. No one ever thought the price of crude would hit $70 in such a short period of time”, he said during an interview with Bloomberg.


Foreign investors inject $5.23bn in 4weeks Financial Vanguard analysis showed that foreign investors injected $5.2 billion through the I&E window in the first four weeks of the year, indicating increased confidence in the nation’s economy. Analysis revealed that foreign investors injected $1.84 billion through the I&E last week, indicating 29 percent increase, when compared with $1.42 billion injected the previous week. However, the naira depreciated by 25 kobo in the I&E window last week, as the indicative exchange rate rose to N360.35 per dollar from N360.10 per dollar the previous week. The naira, however, remained stable at N364 per dollar in the parallel market. Meanwhile, the CBN on Friday injected another $304 million into the foreign exchange market through the Retail Secondary Market Intervention Sale (RSMIS). Announcing the intervention on Friday, Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor said: “The Central Bank of Nigeria (CBN) has intervened in the Retail Secondary Market Intervention Sales (SMIS) of the inter-bank Foreign Exchange Market to the tune of $304.4 million.” He said that interventions were in favour of interests in the agricultural, airlines, petroleum products and raw materials and machinery sectors. Reiterating that the objective of the CBN remained to boost liquidity, production and trade, Okoroafor explained that the CBN would continue to ensure liquidity in the interbank sector of the market as well as sustain its interventions in order to drive economic growth and guarantee market stability. Speaking further, Mr. Okorafor expressed optimism that the Nigerian economy stood to gain massively from the bank’s forex management strategy as could be seen in the accretion to the foreign reserves, which now stands at over $40 billion. Financial Vanguard analysis revealed that the apex had intervened in the foreign exchange market four times this year to the tune of $986 million. The apex bank intervened with $262.2 million on January 12, $210 million on January 15, $210 million on January 23 and with $304.4 million on January 26. Stable cost of funds as N272bn TBs enhance market liquidity.


Cost of funds is expected to remain relatively stable this week b uoyed by inflow of N272 billion from maturing bills. Last week, cost of funds fell sharply by 1,226 basis points (bpts) following inflow of statutory allocation funds of over N600 billion. This combined with inflow of N67.65 billion from matured treasury bills cancelled the effect of N351.71 billion outflow through secondary TBs issued by the CBN in continuation of its liquidity mop up operations. According to data from Financial Market Dealers Quote (FMDQ), interest rate on Collateralised (Open Buy Back, OBB) lending fell by 1,217 bpts to 4.5 percent last week from 16.67 percent the previous week. Similarly, interest rate on Call lending dropped by 1.234 bpts to 5.33 percent on Friday from 17.67 percent the previous week. While there will be auction of primary market TBs worth N252.7 billion this week, analysts project this will have marginal impact on cost of funds, due to inflow of N272.21 billion from maturing TBs, as well as the continued effect of the inflow from statutory allocation funds which commenced last week.

https://www.vanguardngr.com/2018/01/nigerias-external-reserves-hit-4-year-high-40-3bn/

This nonsense had to stop. Which one is external reserve?

Just yesterday i paid $200 for a service online, and guess what, it cost me about N74000.

This is not joke and i wonder why they are trying to make us look stupid

If the economy is good, Nigerians will know..

it's even more surprising that the world is currently experincing synchronous economic boom, and yet, all we can show for is unemployment for the youths.

Abeg make i go see my post-op patient..this country don tire me.

What? And dollar is still N360? Until it translates to a bag of rice for 8k, pms back to normal price, and Nigerians begin to feel the impact, this is rubbish

Nkemtreasure:
What? And dollar is still N360? Until it translates to a bag of rice for 8k, pms back to normal price, and Nigerians begin to feel the impact, this is rubbish

Buy a bag of rice for 8k?

Cannot happen again in this country

989900:
Merge exchange rates (FMDQ and Bank rates: 305 & 360) to somewhere around 320 at the minimum (that lowers inflation on imported goods) , then increase minimum wage as little as possible (if the ghost workers weeding is true), say N25,000 thereabout minimum wage, then the increase in crude prices and gains and savings made would make any sense/impact to the average Bola, Emeka, Ibrahim, etc. on the street.


BTW, What do we have in the ECA?

On what income indices is the budget/economy being run right now?



P.S. I'm thinking less about them foreign investors right now.

Me think that lowering the exchange rate could be inimical to our diversification drive and also make us lose a lot from our oil receipt. It will make exporters earn less when they export their products. A lot of people will then be discouraged as profit margin wane.
Besides, States struggle to meet their obligations despite earning 306 naira on every dollar, what will then happen if they are to earn less?

Sirjamo:
Me think that lowering the exchange rate could be inimical to our diversification drive and also make us lose a lot from our oil receipt. It will make exporters earn less when they export their products. A lot of people will then be discouraged as profit margin wane.
Besides, States struggle to meet their obligations despite earning 306 naira on every dollar, what will then happen if they are to earn less?

You get time self.

They should also tell the truth which is that the reserve has been boosted greatly accumulating foreign debts.

hypertension:
This nonsense had to stop. Which one is external reserve?
Just yesterday i paid $200 for a service online, and guess what, it cost me about N74000....

What's your point exactly and how much was it supposed to cost you? Have you forgotten you'd have paid N100, 000 for that same service a year ago? We are not there yet, but this is still a biiiiig sign of economic progress that within 3 years our reserves has increased by a whooping $10bn.

989900:


Have you forgotten that at $60/barrel in 2014, he'd have paid less than N36,000 for the same service?

And don't forget that at $91/barrel in 2008, he would have paid barely 23k for it.

98990 take a careful... don't confuse the nairaland back to recession. Na jeje jjeje we dey go oh....

usba:
98990 take a careful... don't confuse the nairaland back to recession. Na jeje jjeje we dey go oh....

we need brilliant minds running the economy of this country.

989900:


we need brilliant minds running the economy of this country.

Indeed keep it up, one day you will be our Finance Minister.

This feat is the result of the prudent economic management by the CBN team

Awesome stride!

You saved N40 at 0% and borrowed N50 at 2% and expect us to celebrate. We need men of clear vision and not some blurry vision leader.