External reserves up by $1.02bn in one month

The nation’s external reserves gained a total sum of $1.02billion in one month to close January activities at $36.395 billion from $35.373 billion it stood on 31st December 2020.

This is even as Nigeria’s local currency, Naira, ended the week trading activities, stabled across foreign exchange segments to close at N394.13 to the dollar at the Investors and Exporters (I&E) foreign exchange window.

But the foreign reserves figure which stood at $35.647 billion when the business opened for 2021, climbed to $36.350 billion on January 15th, before gaining $45.062 million in eight days to steady at $36.395 billion as of 27th of the same month.

Consequently, the Naira strengthened against the U.S dollar at the Investors & Exporters (I&E) window of the foreign exchange market on Friday, data posted on the FMDQ Security Exchange webpage where currencies are officially traded showed.

Naira closed at N394.13 at the Friday trading session, representing N0.2 or 0.05 per cent gain from N394.33, the rate at which it closed at the previous session.

On the spot market (I&E window) naira witnessed an intraday high of N415.95 and a low of N390 before closing at N394.13 against the dollar.

The appreciation happened as turnover rose by 35.09per cent, with $24.39 million recorded against the $37.58 million posted on Thursday.

However, parallel market rates in Lagos showed that the closed at N480 to a dollar, which implies that naira depreciated at the unofficial market by N2 or 0.42 per cent higher than N478, the rate that it exchanged hands with the greenback currency in the previous session.

That leaves a the spread of N85.87 between the unofficial market and the I&E window exchange rates, which translates to a gap of 21.78 per cent.

Although, the CBN’s official rate on the last trading of the week remained unchanged at N379 per dollar.

Meanwhile, the Central Bank of Nigeria (CBN) has disdained the significance of the informal currency, saying it is “illegal.”

“We do not agree that the determining factor for our currency should be based on a market that is tainted, where people go to offer bribes,” CBN Governor, Godwin Emefiele had said.

Commenting on the increase in the nation’s foreign reserves, Emefiele had at the just-concluded January Monetary Policy Committee meeting said the improvement in crude oil prices contributed to the increase.

“The MPC noted the increase in the level of external reserves, which stood at 36.23 billion dollars as at 21st January 2021 compared with 34.94 billion dollars at the end of November 2020.

“This reflected improvements in crude oil prices, partial global economic recovery amid optimism over the discovery and distributions of COVID-19 vaccines by most developed economies,’’ he said.

He added the Nigerian economy and the the global economy had continued to show prospects for recovery from the effects of COVID-19.

He, however, assured of improved economic growth in Nigeria in the first quarter of 2021.

“The medium-term outlook for both the domestic and global economies continued to show improved prospects of recovery”, he said.