Naira gains, external reserves steady at $43.17bn in January

…As investors record $666.98bn turnover in 2 days

Motolani Oseni

Amid continuous injections into the foreign exchange market by the Central Bank of Nigeria (CBN), the nation’s currency, Naira, on Tuesday, gained further to close at N362.19 to the dollar at the investors’ window, against N362.58 traded on the first trading of the week, checks by The Daily Times revealed. This is even as the external reserves added the total sum of $57.42 million to settle at $43.17 billion at the end of January 2019, while Investors & Exporters (I&E) FX window recorded $666.98 billion turnover in just two trading days of the week. At the investors’ window, the currency on Tuesday exchanged at N362.19 per the dollar, while market turnover stood at $441.38, higher than $225.6 million traded on Monday. The naira at the unofficial forex market in Lagos, sold at N361 to the dollar, lower than N360 it traded on Monday and N359 on Friday. But the Pound Sterling and the Euro traded at N461 and N411, respectively which were better than N472 and N411 exchanged the previous day. At the Bureau De Change (BDC) segment, the naira was sold at N360 to the dollar, while the Pound Sterling and the Euro closed at N472 and N411. However, the latest statistics obtained from the apex official website showed that the foreign exchange buffer opened 2019 at $43.11 billion but closed at $43.17 billion at the end of January. The CBN in its economic report for fourth quarter 2018 disclosed that gross external reserves were $42.54 billion at end December 2018. “This indicated a decline of 0.2 per cent below the level in the third quarter of 2018. The external reserves position would cover 6.3 months of import of goods and services or 10.1 months of import of goods only, based on the estimated value of import for the fourth quarter of 2018,” the apex bank stated. A breakdown of the official external reserves by ownership showed that CBN reserves stood at $35.27 billion (82.9 per cent), Federal Government reserves, $6.79 billion (16.0 per cent) and the Federation reserves, $0.48 billion (1.1 per cent).” The nation’s foreign reserves opened 2018 year at $38.76 billion and closed January at $40.69 billion. The following month, the foreign reserves hit $41 billion on February 23 and finally closed the second month in 2018 at $42.49 billion. However, in the first quarter of 2018, the foreign exchange buffer of the CBN rose by $7.49 billion when the foreign reserves crossed the $46 billion mark to $46.26 billion on March 29, 2018. In April, the foreign reserves rose by $986 million or 2.1 per cent to $47.49 from $46.51 billion it opened. Interestedly, the foreign reserves were hovering around at $47.7 billion and $47.6 billion in May. According to the CBN, the foreign reserves remained flat at $47 billion in June. At the first 2019 Monetary Policy Committee (MPC) meeting, the CBN Governor, Mr. Godwin Emefiele, had noted that the moderate improvements would further strengthen investor confidence in the wobbly economy. “The MPC, however, remains optimistic of the gradual reversal of the current trend in the medium term, given the current stability in the foreign exchange market and the external reserves position, as well as continued improvements in key macroeconomic indicators,” Emefiele had stated. The slight improvement in the foreign reserves is not uncomfortable with improvement in oil earning accretions after prices at the international market appreciated following supply cut deal among Organisation of Petroleum Exporting Countries (OPEC). Oil price at OPEC was hovering around $60 a barrel in January despite its volatility as price remain depressed due to lower demand and a supply glut. Meanwhile, in its response to an allegation by a national daily newspaper (not The Daily Times), that it engages faceless agents in foreign exchange racket pocketing over N32bn annually, the CBN has unequivocally described the report as unfounded and untrue. According to the Director, Corporate Communications, CBN, Mr. Isaac Okorafor, “the management of the CBN wishes to react to the report wherein BusinessDay newspaper alleges that faceless agents in Nigeria are exploiting the country’s multiple exchange rates to devastating effects and allegedly with the backing of regulators. “The CBN wishes to state unequivocally that this report is unfounded and untrue and challenges BusinessDay to provide the names and also verifiable evidence of collusion between these faceless agents and officials of the CBN, who are working to perpetuate these so-called Fx racket schemes”. The apex bank accused the management of the newspaper of bias, saying that it was not contacted prior to making “such spurious allegations, as we were denied the benefit of responding to this article.” “The CBN wishes to remind BusinessDay, as most financial observers have noted, that the FX rates across various markets governed and regulated by the CBN have been converging, leaving no room for arbitrage opportunities in Nigeria’s FX market”, Okafor stated. For the avoidance of doubt, the CBN spokesman said the bank will continue to act in the best interest of Nigeria and shall ensure it remains focused on its core mandate of sustaining the stability in the FX market. The newspaper had published on the front page a story on Monday, February 4, 2019, titled: “Exposed: The Sleazy Face of N306/$, inside Nigeria’s racket where faceless agents pocket over N32bn annually.”