After gaining $620 million from diaspora remittances in two weeks, the foreign exchange reserves jumped to $35.026 billion, a data from the Central Bank of Nigeria (CBN) has shown.
The accretion, the highest in over a month, has been attributed to a rise in remittance inflows following incentives introduced by the apex bank for dollars received in Nigeria under the ‘Naira for Dollar’ policy.
The rise in forex reserves was also traced to steady high global liquidity and fund flow into the economy.
The flow is expected to witness a relatively higher growth for Nigeria after the recent exit from recession.
CBN Governor Godwin Emefiele said the ‘Naira for Dollar’ scheme gives N5 rebate for every $1 sent by Nigerians in diaspora to the country. The money is paid directly to the account of the beneficiaries, following receipt of the remittance inflows.
Previous foreign reserves movement showed that, on April 1, the reserves stood at $34.85 billion, representing $404 million increase compared to $34.41 billion on March 11.
Aside the reserves, the naira is also appreciating against the dollar. The local currency last week appreciated to N482 to the dollar on the parallel market from N485 at previous week’s close.
However, on the Investors and Exporters (I&E) Forex window, the currency depreciated to N410.50 to dollar from N409.75.
A Forex Trading Associate at AZA, Oghenefejiro Eduviere, said: “We expect the naira to remain stable, hovering around N480 to N485 levels on the parallel market and N400 to N415 level on the Investors and Exporters (I&E) Forex Window, as foreign exchange coffers are set to receive a further boost from recently announced plans for a $500m Eurobond.”
“The foreign exchange reserves rose by $620 million during the last two weeks to the highest in over a month at $35.036 billion as of April 9, according to the Central Bank of Nigeria. The increase in external reserves is attributed to the rise in crude oil prices recorded early in March. The increase may also be partly due to an uptick in diaspora remittances after CBN incentives for dollars received in Nigeria.”
Eduviere, expects inflation for the month to hit a new high of 20 per cent.
He said: “On April 6, Nigeria’s Securities and Exchange Commission banned technology platforms – such as Bamboo, Chaka and Trove – from offering foreign stocks to Nigerians. It says only approved securities can be sold to the Nigerian public. The ban’s fallout will further weigh on the economy, which could be reflected in the exchange rate.”
However, the foreign reserves still fall below the Fitch Ratings, a global rating agency’s prediction of $42 billion foreign reserves for Nigeria by year-end.
In a report titled: “Depreciatory Pressures on Key Sub-Saharan African Currencies to Lessen,” Fitch Ratings had hinged the forecast on its expectation that Brent crude would average $53 per barrel, compared to the $43.1 per barrel recorded in 2020.
