External Reserves Shed $438m As Naira Appreciates To N663.04/$

The external reserves fell by $438 million in the first two weeks of June to $34.66 billion, maintaining the downward trend from last month.

Data from the Central Bank of Nigeria, CBN, showed that the reserves stood at $34.66 billion on June 14, down by $438 million or 1.5 per cent from $35.094 billion on May 30.

Consequently, the reserves had recorded a year-to-date decline of 6.5 per cent or $2.43 billion from $37.08 billion on December 31st, 2022.

Meanwhile, the naira on Friday appreciated by 5.7 per cent to N663.04 per dollar in the Investors & Exporters, I&E window, regaining some of the losses it suffered on Wednesday and Thursday.

The naira had depreciated on Wednesday by 40.8 per cent to N664.01 per dollar following new forex market measures announced by the CBN including elimination of multiple exchange rates and the re-introduction of willing buyer, willing seller model for exchange rate determination in the I&E window.

The downward trend continued on Thursday with further depreciation by 5.7 per cent to N702.19 per dollar.

Meanwhile analysts at Cowry Assets Management Limited and FBNQuest Securities Limited have projected that the forex market will remain volatile in the coming weeks.

Analysts at Cowry Assets said: “In our opinion, we expect to see the foreign exchange market remain volatile in the near term as we begin to see market participants position themselves to determine the fair exchange price levels and, in the medium to long term, ascertain the true value of the naira against the dollar in the market.

Analysts at FBNQuest also said: “Looking ahead, the forex market is expected to remain highly volatile in the near term as market participants actively seek to determine price levels.”

They however noted that the new CBN measures could help reduce the downward pressure on the external reserves.