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Nigeria’s external reserves rose marginally to $33.38 billion in July, a reversal from the downtrend suffered in the two previous months.

Data from the Central Bank of Nigeria (CBN) showed that the balances in the reserves rose by $60 million to $33.38 billion from $33.32 billion at the end of June.

The marginal increase followed $300 million accretion to the reserves in a two weeks upward trend from $33.08 billion on July 12, Vanguard reported.

Prior to the latest development, the reserves fell persistently for three months, from $35.25 billion on April 16 to $33.08 billion on July 12th, indicating $2.17 billion depletion or 6.2 percent decline.

Cumulatively, the external reserves have recorded a year-to-date (YtD) decline of $1.99 billion or 5.6 per cent from $35.37 billion it recorded on December 31st 2020.

Analysts however, opined that the marginal increase recorded in July will persist in the second half of the year (H2’21), citing expected Eurobond issuance by the federal government, increased crude oil production and higher crude oil prices.

In this regard, analysts at United Capital Plc, said: “We expect the Federal Government to proceed with the issuance of Eurobonds following the external debt proposal of $6.2 billion expected to be approved by the National Assembly. We estimate Eurobond issuances at around $3 billion, while the balance may be financed by more multilateral borrowings. These dollar inflows are expected to supplement inflows from pre agreed multilateral borrowings, providing a boost to external reserves.

“Furthermore, crude oil production is expected to improve later in H2-2021. According to data from the National Bureau of Statistics (NBS), average crude oil production in Q1-2021 printed at 1.72 million barrels per day (mb/d), higher than Q3-2020 and Q4-2020’s 1.67mb/d and 1.56mb/d.

“In addition, crude oil prices continue to surge higher with average Brent crude price printing at $65.2 per barrel in H1-2021, 54.9 per cent higher than H1-2020’s $42.1/bbl. Thus, we expect improved dollar inflows from oil proceeds in H2-2021, providing a further buffer for external reserves.


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