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How Nigeria’s external reserves jumped 39 pct in 54 weeks – United Capital

By on October 17, 2017 0 138 Views

From a low of $23.9 billion on Oct 19, 2016, Nigeria’s external reserves have recovered 38.6 percent y/y to $33.1 billion as at Oct 16, 2017. 

Evidently, this is linked to a more stable oil price environment and the ramp-up in production activities in the Delta-region following the peace-deal reached earlier. Image result for dollars
However, the dramatic recovery in Nigeria’s gross external reserves has been driven by more than these two factors.
The Investors and Exporters FX window, introduced in April-2017, has significantly boosted net foreign inflow of capital into Nigeria with total transaction recorded at the segment estimated to be over $8 billion from April to Sept-2017 as FPIs hunt for a bargain in Naira Assets. 
Meanwhile, a flurry of debt issuances by the federal government in 2017 also accounted for this accretion with $1.8 billion worth of foreign currency facility ($1.5bn Eurobond and $300m diaspora bond) added to the CBN’s balance sheet in H1-17. 
Yet, aggressive liquidity mop-up and increased administrative measures on currency usage by the CBN has helped check illegitimate demand for FX.
At $33.1bn, the reserves can cover over 10 months of imports. 
Looking ahead, a stable oil price and output outlook, as well as an expected $2.5bn Eurobond issuance by the FGN, will further drive accretion in the near-term.

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