External reserves hit $40.4bn amid forex interventions

.CBN lifts official FX market with $210m
.Import bill declines to $1.5bn from $5bn

Once again, the nation’s external reserves have risen, giving Nigerians and other close watchers of the nation’s economy something to cheer in the New Year.

And, as projected by the Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, at the Annual Bankers Dinner of the Chartered Institute of Bankers (CIBN) in Lagos last November, the nation’s External Reserves have hit a new level of $40.4 billion.

This is just as the bank injected a total of $210 million into the interbank Foreign Exchange Market in the first round of trading for the year on Monday, January 8, 2018.

Figures obtained from the CBN on Monday, January 8, 2018, indicate that the External Reserves reached the $40.4bn mark on Friday, January 5, 2018, indicating an increase of about one billion United States dollars between December 2017 and January 2018.

Confirming the figure, the Acting Director in-charge of Corporate Communications at the CBN, Mr. Isaac Okorafor, attributed the accretion to the country’s reserves to the bank’s strategy to effectively manage forex demand by various sectors of the economy.

Citing the CBN policy restricting access to forex from the Nigerian forex market by importers of some 41 items as the major turning point, Okorafor said the policy had helped to stop the hemorrhaging of the country’s external reserves, which hitherto witnessed heavy depletion due to huge import bills and other debt obligations.

According to him, the CBN’s policy had ensured a decline in Nigeria’s import bills from over $5bn monthly in 2015 to about $1.5bn in 2017.

He expressed optimism that with the determination of the bank and the cooperation of the fiscal authorities, the external reserves will continue to enjoy more accretion in the course of 2018.

Meanwhile, the CBN injected a total of $210 million into interbank window of the foreign exchange market on Monday, for requests in the wholesale, Small and Medium Enterprises (SMEs) and invisibles segments of the market.

A breakdown of the figure indicates that the CBN offered $100m to the Wholesale sector while the Small and Medium Enterprises (SMEs) and invisibles windows each received $55m.

As new activities begin earnest in 2018, Nigeria’s external reserves has recorded total gain of nearly 50 per cent or $12.9bn in one year, despite continuous interventions by Central Bank of Nigeria (CBN) in recent times to support the local currency, findings by The Daily Times revealed.

The external reserve, which was seen at $25.8bn as at the beginning January 2017, grew to $38.73bn as of December 28, 2017, represented the latest figure of the external reserves.

Many financial experts believe that this development is renewing confidence that the 2018 forex reserves target of the CBN put at $40bn is achievable, as the apex bank steps up its management of forex earnings.

However, it is worthy of note that steady increase in the global oil prices had contributed to the appreciation recorded in the nation’s foreign reserves, as Eurobond lending had positively impacted the foreign exchange buffer of the apex bank.

In November, 2017, the Federal Government of Nigeria raised total sum of $3bn through Eurobonds, which was oversubscribed by about $11bn and split across 10-year and 30-year tranches at issuance yield of 6.5 per cent and 7.625 per cent, respectively.

Also, increased inflow from Diaspora remittances has also being said to have contributed immensely to the Africa’s largest economy forex reserves.

The breakdown of the latest figure showed that the reserves in just one month gained total sum of $3, 785,413,314bn, between November 30, 2017 closing figure of $34, 945,550,023bn and December 28, 2017 balance figure of $38,730,963,337bn.

The central bank latest statistics showed that a week earlier, as of December 22, the Nigeria’s forex reserves stood at $37.92bn, represented 10.1 per cent from a month earlier.

But it stood at $34.53bn as of November 24, up nearly 3 per cent from a month earlier, with a balance of $33.58bn at the same date in October, represented 40.5 per cent, while compared to the balance in the corresponding period in 2016.

Our further checks, however, revealed that the nation’s external reserves under the supervision of the CBN recorded a whopping $8 billion between January and October of the year under review.

The figure showed that during the 10 months considered, the external reserve increased by 30.9 per cent; with an opening figure $25.84bn before closing at $33.83bn on October 31, 2017.

Analysts project that with more favourable business climate and sustained rise in crude oil sales, the nation’s external reserves could witness a further push.

Motolani Oseni, Lagos