The dwindling finances of Nigeria has continued to improve as the country battles with economic recession which has threatened the popularity of the government of the day.
The nation’s foreign exchange reserves have risen further to $25.4bn, according to the latest data obtained from the website of the Central Bank of Nigeria according to Investor King.
In less than one week, the reserves rose by almost $300m from $25.084bn recorded on December 16, 2016 to $25.361 on December 22, 2016, the CBN data showed
This indicated that the foreign exchange reserves had risen to almost four-month high. The last time the reserves recorded something close to this figure was on September 2 when it had the balance of $24.361bn.
The nation’s fast-depleting reserves had recorded $23.89bn low on October 19. The reserves have dropped by 15.9 per cent from last year when they closed at $29.7bn.
At the end of November, the reserves stood at $24.77bn, up from $23.95bn on October 31. The CBN data showed that the foreign exchange reserves declined to $24.92bn on September 14 from $25.11bn on September 9.
Currency and economic experts are not sure if the tiny upticks in the external reserves’ level are sustainable amid a falling naira and acute shortage of dollar in the foreign exchange markets and the economy.
“We are not sure the extent this can go. Currently, the FX market is not a free-float one where the interplay of demand and supply determines price and volume. The uptick is not as a result of supply over demand. It happens when there is a slowdown in the allocation of FX,” the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said.
A senior associate in investment banking at Afrinvest, a research and investment firm, Mr. Ayodeji Ebo, said the gradual increase might only be sustainable if the oil price maintained its current level and there was a continuous ramp up in oil production. The CBN had on June 20 lifted its 16-month-old currency peg and auctioned about $4bn on the spot and futures market to clear a backlog of dollar demand to help boost interbank market trading.
The reserves fell from $26bn on August 4, 2016 to $25.97bn on August 5 as the central bank stepped up dollar sales to boost liquidity at the interbank market and support the ailing naira.
The naira, which touched an all-time low of 365.25 per dollar on August 18 at the official market, has consistently closed around 305.5 in recent weeks.