• Friday, March 29, 2024
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External reserves decline to $42.83bn in February 15

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Nigeria’s external reserves have declined to a two-month low in February in spite of the increase in the price of crude oil to $66.49 per barrel as at yesterday, Monday.

The external reserves dropped to $42.83 billion as at February 15, 2019 from $43.174 billion recorded on January 13, 2019.

Foreign exchange reserves consist of official public sector foreign assets that are readily available to, and controlled by the monetary authorities, for direct financing of payment imbalances, and directly regulating the magnitude of such imbalances, through intervention in the exchange markets to affect the currency exchange rate and/or for other purposes.

The nation’s currency on Monday depreciated by 0.12 percent to N362.07k per US dollar compared to N361.65k/$ traded on Friday last week at the investors and exporters forex window, data from FMDQ show.

At the official window of the Central Bank of Nigeria (CBN), naira also weakened to N306.80k/$ on Monday from N306.75k per dollar on Friday.

The local currency traded stable at Bureau De Change (BDC) segment of the foreign exchange market, closing at N360 per dollar.

In May 2018, the reserves rose to $47.865 billion but declined to $41.523 billion in November of the same year with the price of crude oil above $80 per barrel.

Ayodele Akinwunmi , head, of research, FSDH Merchant Bank Limited, said the downward movement in the external reserves may be a pointer to demand pressure at the foreign exchange market, which may lead to depreciation in the value of the Naira. “This in the short-term is in line with our expectation”, Akinwunmi said.

According to him, the current position of external reserves continues to provide short-term stability for the value of the Naira. However, the medium-term stability in the foreign exchange market will depend on the country’s foreign exchange receipts from both crude oil and non-oil products. The 30-Day moving average external reserves increased by 0.13 percent, from US$43.12 billion at end-December to US$43.17 billion at end-January 2019.

Biodun Adedipe, founder and Chief Consultant of B. Adedipe Associates, projects external reserves to decline to $39.75 billion with expected decline in crude oil prices to $54 per barrel in 2019.

 

HOPE MOSES-ASHIKE