Nigeria’s foreign exchange reserves rose to their highest in 21-months to $37.02 billion by May 14, from $36.66 billion at the end of last month, the latest figures from the central bank showed yesterday.
Forex reserves in Africa’s biggest crude exporter stood at $33.94 billion a year ago. The last time the reserves were at this level was in August 2010.
Bismarck Rewane had said in his monthly breakfast meeting at the Lagos Business School and published by Financial Drivatives Company Limited that reduced demand has led to accretion in reserves.
Rewane, chief executive officer of Financial Derivatives said reserve accretion of 10.24 per cent Year-to-Date ( ytd) summed up to $36.48 billion.
He had predicted that if the growth in reserves remained sustained, the outlook for May will be positive and reach $37.5 billion. At $37.02 billion, the mark may be surpassed before the end of May.
Experts said that the drop in the demand for the U.S dollar would continue to reflect positively on the country’s external reserves.
The forex reserves maintained an upward trend throughout April as it improved by $770 million to $36.520 billion on April 27.
The gains recorded by the reserves were attributed partly, to rising dollar inflow from offshore investors in the Nigerian treasury bills market and also dollar sales by multinational oil companies.
FSDH Securities Limited also attributed the performance of the local currency to the increase in the forex earnings as a result of rise in oil price and oil output, reduced dollar demand from oil marketers following the probe of the oil importers, “the increase of the forex reserves which increased the ability of the CBN to defend the naira and maintain a stable exchange rate as well as the continued focus by the CBN on maintaining a managed float of plus or minus three percent band limit.”
Emerging Markets Strategist, Standard Bank Plc, Samir Gadio, had urged the CBN to maintain its tight monetary stance and continue to mop up excess liquidity, “especially in the aftermath of the activities of the federation account allocations, to contain forex demand.”
In the first quarter this year, the total volume of the dollar offered by the apex bank at the WDAS also fell by 44 per cent to $5.300 billion.