Nigeria external reserves declines on CBN’s FX market intervention

Report says Nigeria’s external reserves has declined to $40.31 billion as of January 21, 2022, the lowest since October 29, 2021, when it stood at $41.82 billion, representing a 3.61 percent decline.

This according to analysts at Coronation Research, was due to continued interventions by the Central Bank of Nigeria (CBN) in the Foreign Exchange (FX) markets.

The researcher said his view remains that the CBN’s position is strong as the level of FX reserves remains high in the long-term context.”

Hence, it seems possible that stability will be maintained in the Investors and Exporters (I&E) window and Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rates in the near term,” the analysts at Coronation said.

Meanwhile it would be recalled Cowry Asset analysts said that in the previous week, at the interbank foreign exchange market, the naira/dollar exchange rate closed at N430.00/USD despite the apex bank’s weekly injections of $210 million.

In all,  a breakdown of the FX intervention showed that $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisible.

Recall that the governor of the CBN Godwin Emefiele, in November 2021 had said that based on in-house analysis and simulations, external reserves could surpass $42 billion by mid-2022 from the $41.5 billion in 2021q3, based on the dynamics of oil price and FX demand for imports.

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