External reserves hit $30.58bn as Naira closes at 385/$1

The nation’s external reserves hit $30.58 billion as at April 19, indicating highest balance in 2017 even as the local currency, Naira, closed the trading week on the positive streak of 385 per US dollar at the parallel market.

The rise showed that the reserves jerked up by a whopping $22.01million in just one day, when compared with the balance of $30.56 billion as at April 18 from the current statistics of $30.58 billion.

The increase coincided with the recent rise in the price of crude which accounts for the 70 per cent of the Nigerian foreign currency earnings.

Although the nation’s reserves went up by 18.3 per cent or $4.7 billion for this year but that figure remains a far off the peak of $64 billion it stood in August, 2008.

This is coming on the heels of increased gap between the interbank market and parallel market end of the foreign exchange market.

The Central Bank of Nigeria (CBN) has not provided any reason for the recent development, which may be attributed to the recent rise in global oil prices and inflow from International Money Transfer Operations (IMTO).

The Organisation of Petroleum Exporting Countries (OPEC), last week said Nigeria’s oil production has drastically dropped from 2 million barrels per day to as low as 1.27 million barrels per a day.

OPEC said the country produced 1.269 million barrels per day last month.

The 13 members’ OPEC cartel, in its new released monthly oil market report for the month of April, said Nigeria recorded the biggest decline of 157,000 barrels per day in March.

Hitherto, analysts had expressed that the marginal increase in oil production after the government and Niger-Delta Avengers entered into truce equally contributed to recent rally on the reserves.

They explained that the output cut agreement reached by OPEC members in late November last year and the OPEC and non-OPEC members’ deal in December is expected to provide boost to the foreign reserves going forward and thereby supporting the fiscal and monetary policy makers in steering the economy out of current recession.

At the foreign exchange market, the Naira, over the weekend, gained a total 15 points to close at N438.5 against N410 it traded a week ago.

The local currency last Tuesday had appreciated by three points from N410 sold per dollar on the first trading day of the week to close at N407.

The Naira, also, gained against other major currencies as it was traded at N490 and N410 at the weekend against N498 and N420 to the pound sterling and Euro, respectively at the unofficial segment of the market.
Although the Naira firmed up at the Bureau De Change (BDC), the dollar was sold at N362 to the dollar, while the pound and the Euro closed at N495 and N428, respectively.

However, trading at the interbank saw the Naira closed at N314.75 to the dollar, while it was steady against pound and Euro at N404.51 and N337.53, respectively.

Throughout last week, the local currency was seen hovering between N405- N410 to the dollar on the parallel market, compared with N398 to a dollar the previous week.

The President of BDC operators, Aminu Gwadabe, had called on the government to ensure the Naira remains stable on its sovereign journey, adding that there must be quick review and increased security surveillance of our nation’s borders and airports.

According to him, “Return of illegal foreign currency cash evacuation through our porous borders and airports, as Dubai in UAE enjoy the illegal evacuation, operators/players compromise, sales of debit cards by banks rather than cash, maximum $10,000 cash allowable for travelers at the nation airport.”

However, Nigeria being an import- dependent economy, strengthening of the local currency has not been easy but still remains a choice the nation has to make.

Gwadabe, therefore, advised the federal government to ensure the Naira remains stable on its sovereign journey by creating special purpose window for foreign investors at the BDCs’ sub- sector like that of IMTO to diversify streams of foreign reserve.

He requested for more liquidity to the BDCs’ sector to ensure market liquidity and availability, adding that review of allowable margin to N5 than N2 per Dollar is necessary.