Nigeria’s Foreign Reserves Hit $36.57 billion; CBN Gov. Defends Naira

Nigeria’s Foreign Reserves

  • Nigeria’s foreign-exchange reserves presently stand at $36.57 billion, rising sharply from $33.42 billion as of April 29, 2020.
  • Based on the latest data obtained from the Central Bank of Nigeria ( CBN). Nigeria’s foreign exchange reserves now stand at $36.57 billion, rising sharply from $33.42 billion as of April 29, 2020. 
  • The Central Bank of Nigeria (CBN) has recently restarted the $100 million weekly dollar sales to small businesses and individuals who are in legitimate need of foreign exchange.

Nigeria’s foreign-exchange reserves presently stands at $36.57 billion, rising sharply from $33.42 billion as of April 29, 2020.

The macro fundamentals surrounding Nigeria’s major exports, including the recent increase in crude oil prices to about $40, appear to have helped Nigeria’s foreign reserve grow steadily.

Based on the latest data obtained from the Central Bank of Nigeria ( CBN). Nigeria’s foreign exchange reserves now stand at $36.57 billion, rising sharply from $33.42 billion as of April 29, 2020. This indicates a $3.15-billion benefit in 33 days.

Foreign exchange reserves are financial assets in foreign-dominated assets held in reserve by CBN. These funds which are dominated by international finance are used to satisfy payment or debt obligations. They also control monetary policies and involve foreign-dominated currencies, foreign-dominated bonds, and other securities backed by international institutions.

This achievement has given more munitions to the CBN Governor, Godwin Emefiele, to defend the naira.

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Also, the macro fundamental of Nigeria ‘s currency currently shows that Mr. Emefiele kept his word on hitting currency speculators hard.

The naira was stable in the short term, and although data obtained from Everdon Bureau de Change showed that the currency had struggled to break the N450 to $1 resistance price level in Nigeria’s parallel market in the last 6 days.

The naira had reached as high as N475 to $1 weeks ago. However, on Thursday morning it was sold at N446 to $1, proving that the monetary captain of Nigeria is bent on stabilizing the currency for the long haul. Remember that the CBN Governor had warned currency speculators and hoarders to stop manipulating exchange rates in Nigeria. He also recommended that the Nigerians stop patronizing currency operators on the black market. The rates they buy the dollar from the black market, he says, are unreal.

Furthermore, Nigeria ‘s central bank has recently restarted the $100 million weekly dollar sales to small businesses and individuals who are in legitimate need of foreign exchange.

Philip Anegbe, Team Lead at CardinalStone Research, had recently told Nairametrics that the pressure on the naira would soon be eased. He said:

“I believe some of the recent pressures on FX is driven by speculators’ panic responses to weakness in dollar earnings, the decline in FX inflow through the I and E window, and suspension of dollar sales to BDCs (Bureau De Change operators).

“The imminent resumption of BDC activities is therefore likely to slightly ease Naira pressures in the parallel markets, but we believe the underlying medium-term fundamental concerns facing the Naira still remain.”

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