External reserves gains as CBN lifted FX market with $698.5m

Against apprehension that the continuous intervention in the foreign exchange market by the Central Bank of Nigeria (CBN) may be hurting the nation’s the external reserves, checks by Newsverge, however, showed an increase of a whopping $693.704 million in just two weeks, even as $698.5 million was injected into the forex market during the same period under review.

The current statistic obtained from the apex bank revealed that the foreign reserves as at October 3, 2017, stood at$32.740 billion against the balance of $32.046 billion on October 19, representing total growth of $693.704 million in just11 working day.

Considering the appreciating level in the first week, our correspondent observed that the reserves recorded just $274.873 million, while comparing $32.321billion on 26, 2017 with $32.046 billion a week earlier before extending the gains by $418.831 million in the second week to have less than $700 million appreciation.

This was in-spite of the central bank injection of the total sum of $698.5 million into the official foreign exchange market in two weeks.

In the recent time the apex bank has continued its sustained liquidity injection to the foreign exchange market, and during the period under review, the bank had intervened thrice in the past weeks with injection of $195 million barely a week ago, $308.5 million on Friday September 29, before embarking on the Independent holiday and the initial $195 million on Monday 25, September, 2017, making its intervention twice in the same week.

This move, however, expected to further ensure liquidity and stability in the FX market. Hence, the Bank, on Tuesday 3 October, 2017, again intervened in the inter-bank Forex market to the tune of $195million.

Figures released by the Bank show that it offered the total sum of $100million to the wholesale segment, while the Small and Medium Enterprises (SMEs) segment received the sum of $50 million.

The invisibles segment, comprising tuition fees, medical payments and Basic Travel Allowance (BTA), among others, received $45 million.

Although, forex market, had on Friday 29 September, lifted with yet $308.5million as part of its ongoing effort to sustain liquidity and stabilize the forex market, after opening the week with a boost of $195 million ahead of the last Monetary Policy Committee (MPC) decisions.

As usual, the $195million intervention was offered in three segments of the market, with the wholesale Secondary Market Intervention Sales (SMIS), of the Inter-bank Foreign Exchange market, it auctioned $100m and also intervened in the Small and Medium Enterprises (SMEs) and invisible segments, with the sum of $50 million and $45million respectively. This brings the total intervention for that week to a sum of $503.5million.

Despite all theses interventions, the Nigerian external reserves have consistently appreciating because as at September 22, 2017, it stood at $32.16billion indicated a total gain of $7.41billion in the last 12 months, this according to the figure obtained from the apex bank website.

While comparing aforementioned statistic with the corresponding period, it showed the reserves stood at $24.75bn, against the $32.16bn, representing an appreciating figure of over seven billion dollar in just one year.

But as at August 28, this year, it has strengthened by $361.6million within one month to record new figure of $32.16bn, thus, representing the highest balance since January 2015.

Although, the external reserves have staged a rebound since early 2017 after hitting a post- election low of about $23.6 billion back in October 31, 2016 (using adjusted data); the external reserves dropped below $30billion in February, 2015, just before the 2015 General Election.

The price of Organisation of Exporting Countries (OPEC) basket of 14 crudes countries stood at $55.62 on Friday against $57.05 traded on Thursday and $56.43 per barrel per day sold two weeks ago.

Consequently, between January and August, the foreign exchange buffer of the CBN appreciated by estimated $5.97bn from $25.8bn it opened this year despite CBN’s unrelenting intervention in the foreign exchange market.

Experts had said steady increase in global oil prices continued to impact on CBN’s foreign exchange buffer and the nation’s economy at large.