External reserves rise to $38.32bn, as 6-month decline halts



Central Bank of Nigeria
                        Central Bank of Nigeria

External reserve rise to $38.32bn, as 6-month decline halts


Nigeria’s external reserve halted a six months downward trend, as it rose to $38.32 billion last week, the first week-on-week (w/w) increase since July last year.

The development which raises hope of continued exchange rate stability in 2020 saw the external reserves first rising by $53 million to $38.342 billion on Wednesday, January 15, from $38.289 billion on Friday, January 9, the previous week, before dropping to $38.32 billion on Thursday, January 16 last week. This translated to w/w increase of $31 million, the first since July 5 last year.

SEE ALSO: In one year foreign reserves drop by $4.45bn

After falling persistently for seven months, from peak of $47.989 billion on July 5, 2018, to $42.296 billion February 28, 2019, the reserves commenced steady upward trend which peaked at $45.175 billion on June 10.

But, after a four weeks fluctuation which ended on July 5 at $45.149 billion, the reserves commenced a six months downward trend which resulted to $6.83 billion or 8.4 percent decline before the upward trend from January 9, 2010.

Financial Vanguard analysis showed that the upward trend recorded last week, was triggered by the 6.3 percent jump in the price of Nigeria’s Bonny Light crude oil, in the first seven days of the month, courtesy of the tension generated by the US killing of Iran’s General Qasem Soleimani, and the latter’s retaliation with missile strikes on two US military bases in Iraq.

Data from the Central bank of Nigeria (CBN) showed that the price of Bonny Light rose by 6.3 percent to $72.18 per barrel on January 7 from $67.91 per barrel on December 31 2019, before dropping to $68.64 per barrel on January 13.

With this development, the naira is expected to maintain its two weeks upward trend this week, even as the CBN sustained its weekly injection of $210 million into the interbank foreign exchange market last week.