Nigeria's forex reserves drop 1 pct to $29.5 bln by end-April

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Stacks of one hundred dollar notes are piled up after counting at the Korea Exchange Bank in SeoulNigerian forex reserves fell 1 percent month-on-month to $29.5 billion by April 28, from $29.8 billion a month earlier, the central bank said on Thursday.

The reserves of Africa’s biggest economy were down 22.6 percent year-on-year when they stood at $38.14 billion. Nigeria’s central bank has used its forex reserves to support the local currency in the wake of falling global oil prices.

Naija247news recalled that the naira exchange rate had last week, opened at the rate of N199.1/$ in the interbank market, appreciating by one kobo from the previous week’s record.

Analysts at Afrinvest Securities Limited, had projected that last week, the local unit would trade at a tight range throughout the week, oscillating between N199.1/$ and N199.13/$, which came to reality.

Specifically, the foreign exchange market witnessed inflows from dollar auctions by international oil companies, which however, did not affect the interbank market exchange rate.

Consequently, the naira depreciated by three kobo to close at N199.13/$ at the close of trading on Friday, while the clearing rate of the Central Bank of Nigeria remained N197/$ throughout the week.

However, the move by CBN to defend the naira by reducing the yearly spending limit for overseas card holders to $50,000 from $150,000, with daily cash withdrawals of $300, stoked demand for the greenback, especially by traders and travellers, in an effort to augment their acclaimed cash requirement for transactions.

The analysts also said that with the recent stability in the currency market, “we expect the naira to remain at current range in the week ahead.”

Meanwhile, the money market rates for this week were quite moderate as average Open Buy Back (OBB) and Overnight rates settled at 15.1 per cent and 16.2 per cent respectively.

The development was attributed to modest levels of liquidity throughout last week, which started at N112.2 billion on Monday, pushing the OBB to 14.2 per cent and Overnight rates, 14.6 per cent.

However, both rates rose 5.8 per cent and 7.2 per cent on Tuesday to settle at 20 per cent and 21.8 per cent respectively and 21.8 per cent for OBB and 23.9 per cent for Overnight rate, on Wednesday, with no liquidity inflow at the beginning of the week to support the opening balance.

 

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