After months of steady decline, the foreign exchange (forex) reserves gained $23.7 million last week closing at $38.3 billion.
The six basis points uptick in external reserves on January 15 came after months of declines, a report by Afrinvest West Africa Limited, an investment and research firm said.
Another Economic Report by Financial Derivatives Company Limited disclosed that last week’s recovery followed projected rise in quarterly oil revenue to around $15 billion at the new oil price of $68 to $69 per barrel.
This was caused by tensions from Iran response to the US killing of its military commander, Qassem Soleimani.
The decline continued until last week’s recovery, which was attributed to a rise in quarterly oil revenue to around $15 billion at the new oil price of $68 to $69 per barrel over tensions from Iran response to the United States (U.S.) killing of its military commander, Qassem Soleimani.
The foreign reserves level stood at $39.65 billion by November 21, last year, compared to $40.33 billion as at end of September 2019.
A data prepared by the Central Bank of Nigeria (CBN) showed that the forex level stood at $39.65 billion by November 21, last year, compared to $40.33 billion as at end of September 2019.
The reserves were at all-time high – $68 billion – in August 2008 before the global financial crises impacted negatively on them.
The reserves position has continued to impact on naira exchange rate stability.
At the Investors’ & Exporters’ (I&E) FX Window, the rate closed at N361.84/$1.00, appreciating 76 kobo week-on-week. Activity level in the I&E Window advanced as total turnover grew 123 per cent week-on-week to $2.6 billion from $1.2 billion recorded in the previous week.
Further analysis of the forex exchange market showed that the Central Bank of Nigeria (CBN) sold $253.38 million to the retail Secondary Market Intervention Sales (SMIS) and Chinese Yen 16.76 million to the spot and short-tenored forwards segment of the inter-bank foreign market.
According to the report, the naira traded within similar bands all week. The CBN Spot rate opened the week at N306.95/$1.00 but closed at N306.90/$1.00, appreciating five kobo week-on-week. At the parallel market, the exchange rate traded flat all week to close at N362.00/$1.
At the FMDQ Securities Exchange (SE) FX Futures Contract Market, the total value of open contracts of the naira increased by $195.2 million week-on-week to $10.5 billion.
The December 2020 instrument contract price of N367.18 saw the most buying interest with US$188.2 million additional subscription taking total value to US$678.48 million.
On the other hand, the September 2020 instrument contract price N366.27 was the least subscribed, with marginal subscription of $2 million to gross US$371.5 million.
According to the Afrinvest report, the Central Bank of Nigeria (CBN) is expected to maintain its foreign exchange stability drive by sustaining interventions.
On the money market activities, the CBN had last Wednesday, auctioned T-bills worth N225.4 billion. The offer was 1.85 times oversubscribed across all maturities.
The 91-day bill had the most buying interest at 8.92 times bid to cover while the 182-day and 364-day instruments trailed with 3.30 times and 1.44x times respectively.
The stop rates were 2.95 per cent, 3.95 per cent and 5.09 per cent for the 91-day, 182-day and 364-day notes respectively, a decline from the previous stop rates of 3.5 per cent, 4.9 per cent and 5.2 per cent. The bank only sold the offered amount across board.
On Thursday, the apex bank conducted Open Market Operation (OMO) sale, issuing instruments worth N200 billion. At the T-bills secondary market, average yield declined on two of five trading days. On Monday and Tuesday, average yield rose four basis points and 34 basis points respectively while rates remained flat on Wednesday.
“Due to N440.8 billion inflows from maturities OMO N433.8 billion; T-bills: N7 billion in the coming week, we anticipate a decline in money market rates across board. Furthermore, we expect the CBN to continue with its liquidity mop-up via OMO sales,” the report said.