Nigeria’s external reserves hit $33.11 billion last Thursday, following increase in global oil prices to an average price of $50 per barrel.
External reserves monitored by Central Bank of Nigeria (CBN) accretion in 2017 can be linked to higher oil exports and increased activity in the investor exporter window.
The price of Organization of Petroleum Exporting Countries (OPEC) basket of 14 crudes countries stood at $54.44 per barrel on Thursday, the highest this year.
Hitting $33.1 billion on Wednesday, the highest in 2017, the Nigeria’s external reserves have gained $621 million or 1.9 per cent from $32.49 billion it opened in October.
For the third quarter of 2017, the external reserves gained $6.6 billion or 25.7 per cent from $25.8 billion it opened January to $32.49 billion, the highest in 31-month.
However, in the second quarter, it rose by $4.44 billion or $17.2 per cent to $30.28 billion despite CBN sustained pressure in bridging the gap between official foreign exchange and parallel market rates, with the introduction of several foreign exchange windows.
Experts had said steady increase in global oil prices continued to impact on CBN’s foreign exchange buffer and the nation’s economy at large.
CBN spokesman, Mr. Isaac Okorafor, had noted that the increase in external reserves can be attributable to peace in the oil-rich Niger-Delta region of the country, which resulted into increased oil output and earnings.
Okorafor said with the sustained interventions, the apex bank has been able to push foreign exchange demand away from the parallel market into the formal regulated market.
With the increase in external reserves, Naira at the foreign exchange market continued to appreciate.
Analysts at Cordros capital, a Lagos based research and security firm, said, “We expect the naira to appreciate against the Dollar in the parallel market and the I&E window, as interventions by the apex bank persist, amid steady accretion to the foreign reserve – supported by relatively bullish outlook on oil price and production in the near term – in addition to inflows from portfolio investors”.
CBN lifts BDC operators with $2.64bn FX supply
Meanwhile, in a move to achieve exchange rate convergence and stability, the Central Bank of Nigeria has supported the Bureau De Change (BDC) operators with $2.64 billion foreign exchange supply in 22 weeks.
The CBN in April 14, 2017 had resolved to raise foreign exchange supply to BDC operators to $40,000 weekly from the $20,000 weekly it sold to the each currency dealers.
LEADERSHIP observed that the estimated $2.64 billion supply to BDCs operators ended September 30, 2017, though the CBN continued its intervention to the operators in October.
A source hinted LEADERSHIP that since the announcement in April 14, the apex bank has supplied each 3,000 BDC operators $40,000 on weekly basis.
The president, Association of Bureaux De Change Operators of Nigeria (ABCON), Mr. Aminu Gwadabe, said limited access to foreign exchange is impacting negatively on the association despite the CBN’s weekly intervention.
He noted that the multiple rates at which banks buy foreign exchange at N358/Dollar while BDCs operators buy at N360/dollar from the same CBN window is also another challenge facing the operators.
The CBN was reported to have met with BDC operators to “correct” the conflicting exchange rates.
Gwadabe disclosed further that banks are obnoxious charging its members and it is affecting BDCs operators in Nigeria.
Admitting that the prevalence of unregistered operators is another issue, he said public preference of open market (parallel market) is killing the BDC business.
Recently, operatives of the Department of State Security (DSS) arrested some unregistered BDC operators across the country. Also raided by the DSS operatives were registered BDCs operators who were accused of selling the Dollar above N400.
The development, BDC dealers said, forced some of the operators to seek means of selling foreign currencies in their possession, especially dollars, pounds and Euros at stipulated rates.
The South West Chairman, Association of Bureau de Change Operators of Nigeria (ABCON), Mr. Taiwo Ebenezer, confirmed the weekly intervention since April to LEADERSHIP.
He noted that the CBN supply $20,000 foreign exchange to BDCs operators on Monday and another $20,000 on Thursday, adding that the association has been appealing to CBN to lower the margin.
“We have been appealing to CBN to lower the margin at which they supply commercial banks. BDC operators buy from CBN at N360/dollar. We are directed by CBN to sell at N362/Dollar and if you check the market rate presently, hardly will a BDC operator sell at N361.5/ dollar. We will continue to appeal to CBN to review the rate since it will benefit the nation’s economy”, he explained.
However, the Naira on Friday closed at N362 against the dollar at the parallel market rate and N360.25 against the dollar at the interbank rate. Similarly, the naira at the Bureau De Change segment was trading at N363/dollar.