Foreign Reserves Hit $30.5bn on Rising Oil Prices
The foreign reserves of Nigeria has increased amidst tremendously as the country struggles to giggle out of recession. The nation’s foreign reserves reached $30.5 billion last week as a result of increased global oil prices, checks by a correspondent on the Central Bank of Nigeria’s (CBN) website have revealed.
Data from Organization of Petroleum Exporting Countries (OPEC) revealed that basket of 14 crudes stood at $47.48 per barrel last week from $45.21 a barrel it opened in July.
Experts said world economic growth in 2018 is forecast at 3.4 per cent, the same level of growth forecast for 2017. “This reflects a continued strengthening of the global recovery which is becoming more balanced, with stability in the oil market remaining a key determinant. Global growth in 2017 is expected to be around 1.27 million barrel per day, broadly unchanged from previous month, average 96.4 million barrel per day”, they said.
According to report, Nigeria’s crude oil production had been stuck on 1.8 million barrel per day and has now recorded an additional 200,000 barrels per day.
In June, the foreign reserves dropped by $41 million or 0.13 per cent to $30.29 billion when it opened in June to close at $30.33 billion.
Analysts had attributed the steady fall in the foreign reserves to CBN’s aggressive interventions in the foreign exchange market aimed at boosting naira and stabilizing the exchange rate.
The CBN in April opened a new special foreign exchange window dedicated to investors, exporters and end users. According to analysts, external reserves of $30.5 billion will cover imports for a period of over six months.
In a circular entitled, ‘Establishment of Investors and Exporters Window’, the CBN claimed this new window was introduced to boost liquidity in the foreign exchange market and ensure timely execution and settlement of eligible transactions.
In its economic report for May, CBN said the external sector weakened in the month under review due to the decline in crude oil prices from an average of $52.90 per barrel in April 2017 to $51.04 per barrel.
Increased shale oil production in the United States and supply by non-members of the OPEC both contributed to the fall in crude oil prices.
The report said, “Consequently, foreign exchange inflow through the CBN, at $2.26 billion, declined by 21.4 per cent below the level in the preceding month, but was 27 per cent above the level in the corresponding period of 2016. The decline relative to the level in the preceding month was driven by fall in both oil and non-oil proceeds.
“Overall, the net outflow through the Bank in the month of May 2017 was $0.76 billion, in contrast to a net inflow of $0.71 billion and $0.09 billion recorded in the preceding month and the corresponding period of 2016, respectively”.
It noted that aggregate foreign exchange inflow into the economy amounted to $5.78 billion, representing five per cent decline below the level in the preceding month, but showed an increase of 30.8 per cent above the level in the corresponding period of 2016.
The report further noted: “The development relative to the preceding month reflected the fall in inflow through the Bank. Inflow through autonomous sources and the Bank were $3.52 billion and $2.26 billion and, accounted for 60.9 per cent and 39.1 per cent of the total, respectively.
“Non-oil sector inflow, at $1.39 billion (23.1 per cent of the total), fell by 30.2 per cent, below the level in the preceding month. Autonomous inflow rose by 9.8 per cent, above the level in April 2017.
“Aggregate foreign exchange outflow from the economy, at $3.18 billion, rose by 38.8 per cent and 70.4 per cent, above the levels in the preceding month and the corresponding month of 2016, respectively.
“Thus, foreign exchange flows through the economy, resulted in a net inflow of $2.60 billion in the review month, compared with $3.79 billion and $2.55 billion, in April 2017 and the corresponding month of 2016, respectively,” it added.