The country’s external reserves rose to $26.2bn on January 4, 2017, up from $25.8bn on December 30, 2016, according to the latest data from the Central Bank of Nigeria.
The data also showed that the country’s foreign exchange reserves as at December 30,2016 was $25.84bn.
The foreign exchange reserves also rose to a four-month high of $25.7bn at the end of the year.
The foreign exchange reserves have been rising in recent weeks following the gradual increase in oil price and production output.
In less than one week, the reserves rose by almost $300m from $25.084bn on December 16, 2016 to $25.361 on December 22.
However, currency and economic experts are not sure if the tiny upticks in the external reserves’ level are sustainable amid a falling naira and acute shortage of dollar in the foreign exchange markets and the economy.
Despite the staggering crash in the value of the naira against the United States dollar and other major foreign currencies last year, the CBN spent $4bn from the nation’s external reserves to defend the local currency in 12 months. The effort led to a 14 per cent fall in the country’s external reserve
The controversial defence of the naira by the CBN has come under severe criticism by economists, who believe that the forces of demand and supply should be allowed to determine the exchange rate of the naira, at least to a considerable level.
A senior associate in investment banking at Afrinvest, a research and investment firm, Mr. Ayodeji Ebo, said the gradual increase might only be sustainable if the oil price maintained its current level and there was a continuous ramp up in oil production.
An analyst, Mr. Bisi Sanda, said there were indications that oil price and output would rise further this year.
He, however, said that the Federal Government needed to use this to the country’s advantage.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said aside from the increases in oil price and output, the upticks in the external reserves could also be linked to the slowdown in the allocation of forex to the market by the CBN.
Culled from: http://www.financialwatchngr.com/2017/01/06/nigerias-external-reserves-rise-further-to-n26-2bn/