Nigeria’s foreign exchange (forex) reserves has ended 2016 at a positive note of $25.78 billion, after gaining $420 million in seven days.
The resurging reserves’ profile which is a result of the persistent and gradual gains in the last three months, is raising the hopes for calm forex market activities in 2017, if the trend subsists, as it would curtail panic and speculative demands, which affect the naira value, reports The Guardian.
The rise in the stock of forex reserves had defied mounting pressure from demand and series of interventions through special auctions by the regulator in the last three months.
According to the Newspaper, the last time the reserves were at this level was in the middle of August 2016, with average growth of about 2.8 per cent from the end of October till date.
At $25.78 billion, the reserves recorded about $1 billion increase, or 4.2 per cent rise month-on-month, up from $24.77 billion at the end of November, as marginal rise in the international oil prices and production remained relatively stable.
However, at the same level too, it declined by 11.7 per cent from $29.13 billion as at December 2015, due to fallen price of crude oil, which depleted Nigeria’s forex earnings’ capacity and huge demand by importers.
A combination of exchange rate stability at the interbank market, slight improvement in capital importation and the country’s management of the foreign exchange policy through the Central Bank of Nigeria (CBN), have contributed to the assessed reserves’ accretion.
Six months ago, the CBN inaugurated the flexible exchange rate policy as a measure to contain the declining value of the naira, as well as attract forex inflow.
As part of the measure, it also introduced the Forwards Market, where people can buy forex for future use at the current rate.
CBN has so far contracted over $3.8 billion and redeemed the maturing ones, even as it sold about $1 billion at the market last week to clear a backlog of dollar obligations in selected sectors.
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