Foreign reserves of Africa’s largest economy now at $47,42 billion as of Thursday, June 7, 2018.
The nation’s foreign reserve is gradually depleting against $50 billion projection by the Central Bank of Nigeria (CBN)
Analysts said the pressure on demand from foreign investors was mainly responsible for the low growth in the external reserves.
Foreign reserves of Africa’s largest economy fell in six days by $170 million to $47,42 billion as of Thursday, June 7, 2018, the latest data from the Central Bank of Nigeria seen Business Insider Sub-Saharan Africa showed.
The nation’s foreign reserve is gradually depleting against $50 billion projection by the Central Bank of Nigeria (CBN) to be achieved before the end of 2018.
The reserves, which recorded the highest mark in 2018 on May 10 at $47,86 billion, made its first decline in eight months on May 14 slipping to $47.79 billion.
Analysts at FSDH Research, in a financial market report released on Thursday, June 7, 2018, said the month-on-month growth rate recorded in the external reserves was the lowest level since July 2017.
Ayodele Akinwunmi, Head of Research at FSDH Merchant Bank, said the pressure on demand from foreign investors was mainly responsible for the low growth in the external reserves.
“The 30-day moving average external reserves increased by 0.36%, up from $47.49bn at end-April to $47.66bn at May 28, 2018. The total turnover at the Investors’ and Exporters’ FX Window between April 2017 and May 2018 stood at $50.73bn. The highest amount was recorded in January 2018.”
“Our analysis between August 2017 and May 2018 shows that Nigeria recorded the lowest foreign exchange inflows through the I&E Window in May 2018.”
FSDH Research expects the positive domestic and external environment to further lead to external reserves accretion in the short-term and this development should provide further stability for the foreign exchange rate.
Meanwhile, the Central Bank of Nigeria (CBN) is set to commence bi-weekly trading sessions of the Naira-Yuan Swap Agreement to ensure liquidity for trade and direct investment between the Nigeria and China.
The currency swap deal is valued at 16 billion Renminbi (RMB) and about 720 billion in Naira. The deal is expected to reduce the demand for US dollar by Nigerians importing goods from China, and consequently strengthening the value of the Naira.
The Nigerian naira is currently trading at N361 to a dollar at the parallel and investors' windows.