Economy
Resilient Naira stages a comeback
BY EMEKA EJERE
There is a near stability at the official Investors and Exporters (I&E) window of the Nigeria’s foreign exchange market following intensified efforts by the Central Bank of Nigeria (CBN) in that direction by way of forex support.
However, some analysts attribute consistent decline that had been experienced in the country’s external reserve level to the continuous intervention of the apex bank in ensuring the stability of the exchange rate.
Nigeria’s external reserve dropped by 0.05% on Tuesday, 7th December to close at $40.950 billion, representing a decrease of $22 million compared to $40.972 billion recorded as of the previous day.
The nation’s foreign reserve had gained $5.99 billion in the month of October, as a result of the $4 billion raised by the federal government from the issuance of Eurobond in the international debt market.
In November, the external reserve lost $633.47 million in value as against a gain of $5.99 million recorded in the previous month and $2.76 million gain in September 2021. On a year-to-date basis, the reserve gain has reduced to $5.74 billion.
According to the data at the FMDQ Security Exchange where forex is traded officially, exchange rate between the naira and the US dollar opened at N413.69/$1 on Friday after it closed at N415.07 to a $1 on Thursday, 9th December 2021.
Meanwhile, the local currency, on Thursday continued its free fall in the parallel market since the central bank stopped selling foreign currency to exchange bureaus at the end of July.
While the official market exchange rate holds steady at N415 naira to the dollar, it fell to N572 naira to the dollar at the black market.
The exchange rate between the naira and the US dollar closed at N413/$1 at the Investors and Exporters forex window on Wednesday and opened at N415/$1 on Thursday.
In a bid to stem the collapse of the national currency, the CBN had toughened its tone in September, forcing Aboki FX website, a platform which since 2014 provided exchange rates on the parallel currency market to stop its activities.
It accused the founder of the site of manipulating exchange rates, which would have the consequence of “killing” the Nigerian economy, according to the governor of the banking institution.
In another move to help stabilize the local currency, the Debt Management Office (DMO), on Tuesday disclosed that it has supported the naira Exchange Rate with $15. 368 billion.
According to the Director-General of the DMO, Ms. Patience Oniha, the $15. 368 billion which was raised from external borrowings between January 2011 and September 2021 strengthened the nation’s foreign reserves, thereby firming up that nation’s currency at the foreign exchange market.
Ms. Oniha explained that there was more to external borrowings than just raising funds to finance budget deficits.
Her words, “The DMO’s activities are not limited to domestic financial markets. It may please you to note that the DMO has raised over USD15.368 billion through Eurobonds and a USD300 million Diaspora Bond to finance budget deficits and various projects.
“Through these securities issuance in the international capital markets, the sources of funding for the Federal Government has expanded while it created opportunities for Nigerian corporates including banks to raise capital abroad. Perhaps, even more important, the proceeds of Eurobonds issued, increased Nigeria’s External Reserves thereby supporting the Naira Exchange Rate.”
Meanwhile, crude oil prices stabilized on Wednesday morning after the Energy Information Administration reported an inventory draw of 0.2 million barrels for the week to December 3.
The report comes a day after the American Petroleum Institute surprised markets with an estimated crude oil inventory draw of over 3 million barrels that helped push prices higher.
In EIA estimates, last week’s draw compares with a modest decline of 900,000 barrels for the first week of December. At 432.9 million barrels, U.S. crude oil inventories remain below the five-year seasonal average.
Oil prices had rebounded since the start of the week as the initial fear that the new Omicron variant could prompt new lockdowns began to subside amid reports of mild symptoms that don’t require hospitalization
