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External reserves rise to $31.43billion

By on September 2, 2015

Nigeria’s foreign exchange reserves were $31.43 billion on August 27, up by 1.12 per cent from $31.08 billion a month earlier, data from the Central Bank of Nigeria (CBN) showed on Monday.

The forex reserves of Africa’s top crude exporter were down 20.65 per cent year-on-year from $39.61 billion a year ago.

The decline from $31.63 billion on August 14 reflected dollar sales by the central bank to bureau de change operators to narrow the margin between the naira currency’s official and black market rates, Reuters stated.

Meanwhile, the naira weakened against the dollar on Monday on the parallel market after a boost in liquidity and a surge in demand for dollars, traders said.

The naira traded at N218 to the dollar in the bureau de change market, 2.34 per cent weaker than the N213 it closed at on Friday.

“There is an upsurge in demand for the dollar due to increase in liquidity in the system, with some buyers wiling to pick up dollars at any available rate,” the president of the Association of Bureau de Change of Nigeria (ABCON), Aminu Gwadabe said.

The naira hovered between N208-N210 to the dollar last week after the central bank increased dollar sales to bureau de change operators in a bid to narrow the margin between parallel and interbank market rates.

Another dealer said a number of people were buying up dollars to pay school fees and other commitments abroad, fuelling a surge in demand at the parallel market.

The naira stood at N199 to the dollar on the official interbank window yesterday, weaker than the N197 to the dollar rate where the local currency had closed since February, when the central bank introduce tight control in the official market.

Analysts at Meristem Securities Limited noted that in the In the light of the country’s fragile economic state, coupled with the low level of global oil prices and consequent decline in government revenues, it appeared that the Nigerian government may not possess the resources to adequately stimulate the economy in the short term.

“This therefore makes collaborations with the private sector, especially foreign direct investors and portfolio investors, imperative. We believe the recent numbers from the NBS will further exert pressure on the apex bank and Monetary Policy Committee (MPC) to allow for relaxation of the current trading rules to lubricate the liquidity channel and thus stimulate foreign direct investments and foreign portfolio investments inflows to the real sector and financial markets accordingly,” the firm added in a note to THISDAY Monday.

 

[ThisDay]