External Reserves Drop By $35.67bn
Nigeria’s external reserves, last week, fell for the fourth consecutive week to $35.67 billion even as the naira depreciated to N462 per dollar in the parallel market.
Data from the Central Bank of Nigeria (CBN) shows that the reserves fell to $$35.672 billion on Thursday last week from $35.725 billion the previous week. This translated to week-on-week (w/w) decline of $53 million dollars, more than 100 percent increase from the $23 million w/w decline recorded in the previous week.
According to the CBN data the reserves have been on the downward trend for four weeks since September 17th. It fell by $139 million to $35.672 billion last week Thursday from $35.811 billion on Thursday September 17th.
Prior to the four weeks decline, the reserves rose steadily for two weeks, by $145 million to $35.811 billion on September 17th from $35.666 billion on September 2nd.
Investigations reveal that the sustained decline, especially at a time of relatively stable crude oil prices, might not be unconnected to the CBN’s dollar injection in the foreign exchange market in a bid to keep the exchange rate stable.
However, in spite of the intervention the naira depreciated by N5 in the parallel market last week, though it remained stable at the Investors and Exporters (I&E) window.
While the I&E exchange rate remained stable at N385.83 per dollar last week, the parallel market exchange rate rose to N462 per dollar on Friday from N457 per dollar the previous week.
Analysts at Lagos based investment firm, Cowry Assets Management Limited, however projected that the naira might depreciate at the I&E window this week, following rise in the exchange rate for 12 months forward contract.
They stated: “In the new week, we expect exchange rate to remain stable at the Bureau De Change market amid sustained intervention by CBN. However, we expect marginal depreciation at the Investors and Exporters FX Window (I&E FXW) as 12 months forward contract depreciated to N400.25/USD signaling where the free market should trade.