TRACKING >>The nation’s foreign reserves so far this year rose by 2.3 per cent or $1.01 billion as against $43.12 billion stood earlier in the year.
It however dropped by $770 million to $42.13 billion as at August 21, 2019, from $44.9 billion it opened in the month under review.
The external reserve which is monitored by the Central Bank of Nigeria (CBN has been appreciating continuously due to the steady rise in global oil prices, traded high on Thursday at $56.46, lower than $60.66 a barrel closed on Wednesday, compared with $59.94 it stood on Tuesday.
Commenting on this development, the head of research, PanAfrican Capital Plc, Mr. Moses Ojo, explained that the decline in global oil prices affected the foreign reserves, adding that CBN intervention is also another contributing factor.
He noted that the foreign reserves might likely continue on a decline as CBN continued to intervene in the foreign exchange market and drop in global oil prices.
The apex bank, on its part, has continued to support the local currency through consistent intervention in the official foreign exchange market.
In fact, the CBN on Tuesday injected $210 million into the inter-bank foreign exchange market, while $100 million was offered to authorised dealers in the wholesale sector of the market, while the Small and Medium Enterprises (SMEs) and the invisibles segments were allocated the sum of $55 million each.
The CBN governor, Mr. Godwin Emefiele, recently said: “In order to reduce our reliance on the importation of items which could be produced in Nigeria, we restricted access to foreign exchange on 43 items, while deploying our intervention funds to support growth and productivity in the agricultural and manufacturing sectors.
“These measures helped to support the attainment of our monetary policy objectives such as a reduction in the inflation rate and improved accretion to our foreign reserves.”
Meanwhile, the naira traded flat against the dollar at N360.00 in the parallel market, while it depreciated by 0.07per cent to N363.01 against the dollar at the Investors & Exporters Foreign Exchange (I&E FX) window.
At the money market, the overnight lending (OVN) rate moderated by 50 basis points to 24.86 per cent following inflows from matured OMO bills worth N92.31 trillion.
“However, we highlight that system liquidity is still in negative despite the significant presence of market players at the CBN’s standing lending facility (SLF) window, where NGN438.06 billion was taken,” analysts at Cordros Capital explained.
Furthermore, the analysts said:: “Activities in the Treasury bills market were bearish, as the average yield widened by 94bps to 15.38 per cent. Sell-offs of the 57DTM (+78bps), 134DTM (+111bps) and 204DTM (+432bps) bills led to yield expansions at the short (+6bps), mid (+16bps) and long (+215bps) tenor segments of the yield curve respectively.
“Similarly, trading in the Treasury bonds market was bearish as the average yield widened by 5bps to 14.48 per cent. Sell-off on FEB-2020 (+37bps) and JUL-2034 (+15bps) instruments led to yield expansion at the short (+13bps) and long (+6bp) tenor segments of the curve. Conversely, demand on MAR-2027(-6bps) instruments, led to yield contraction at the mid (-3bps) segment.”
