External Reserves Recover Marginally as Crude Oil Prices Rise, CBN Targets N200/$ Parallel Market Rate


Nigeria’s external reserves which had been on a steady decline, rose marginally week-on-week to $27.808 billion as at Wednesday, compared with the $27.790 billion it attained the previous Wednesday, according to the latest figures from the Central Bank of Nigeria (CBN).
This followed an increase in international crude oil prices which yesterday hit highs not seen in four weeks, as a positive economic report offset continuing concerns about a global supply glut.
The price of West Texas Intermediate crude oil, the US benchmark, rose to $34.13, while the price of Brent crude, the global benchmark, rose to $36.62.
However, oil analysts argued that the global glut of oil was more than enough to absorb increased demand, likely leading to a prolonged period of low prices.
But commenting on Nigeria’s external reserves position, CSL Stockbrokers Limited, in a report noted that what was more interesting is that the level of reserves in terms of goods import cover had been steady if not rising gradually over recent months.
This, the firm attributed to the fact that imports had been contracting, revealing that the 12-month moving average of goods imports in the country is presently at 5-year low.
“The steadiness of import cover is not a positive sign as the decline in imports is reflective of the economic slowdown. From a balance of payments perspective however, the fact that the reserves/import ratio is not falling perhaps provides some indication of why a genuine balance of payments crisis has not forced the Central Bank of Nigeria to abandon its commitment to keeping the currency at N200/$1 on the interbank market,” they added.




Check This Day newspaper for the full story.











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