Naira Hits N500/$ As Reserves Hits $28.3bn
Having hovered around N498 to the dollar at the parallel market for weeks, the value of naira dropped to a record low of N500 to the dollar on the black market, even as external reserves rose to $28.28 billion the highest in the year highest in a year.
The naira however remained stable at N305.25 to the dollar at the interbank market, on the website of the Association of Bureau de Change Operators, the naira was quoted at N315.38 to the dollar.
Demand for the greenback grew and the Central Bank of Nigeria rationed dollar supply, having sold $660 million in 3- and 5- month currency forwards at an auction aimed at clearing a backlog of dollar demand. Traders however said the dollar sale was not enough to satisfy the market.
Data on the website of the apex bank showed that the nation’s external reserves has risen by 7.89 per cent since the beginning of the year. Traders said while the apex bank has been selling dollars on the official market to support the naira, dollar shortages were causing the naira to weaken on the black market.
Head of Africa research at Standard Chartered Bank, Razia Khan said “despite rising foreign exchange reserves, it is the amount of forex that is supplied that matters. The parallel market, by its nature, is particularly sensitive to demand-supply imbalances, and has a tendency to overshoot. Supply of forex matters more than any other factor.”
Nigeria’s external reserves which had declined to $23.896 billion in October last year has continued to rise especially as the price of crude oil at the international market sustains its northward move. Global oil price had begun to rise following the output cut agreement by OPEC countries. The price of oil which had declined to around $35 per barrel has since climbed steadily to $58 per barrel.
This had reflected on the oil dependent country’s reserves which has grown by 18.7 per cent compared to its 2016 low of $23.89 billion last year October. According to latest data released by the Central Bank of Nigeria show that the 30-day moving average of the reserves as at February 2, 2017 stood at $28.28 billion.
While the current figure shows a decline of 2.4 per cent when compared to $28.978 billion which the 30-day moving average was on January 4, 2016, CBN data show that gross official reserves picked up by $1.1 billion in December on a 30-day moving average basis to $25.8 billion.
