Nigeria’s gross official reserves declined by $276.26 million to $35.41 billion in November 2020, from $35.69 billion in October 2020.
The external reserves, which give the CBN the financial muscle to defend the naira, have continued to decline as result of a sharp drop in oil prices, and FX revenue, occasioned by Covid-19.
Since the receipt of International Monetary Fund (IMF) loan proceeds of about $3.4 billion in May 2020 to tackle the Covid-19 pandemic, the Central Bank of Nigeria (CBN) has managed to hold FX reserves broadly stable, with a downward bias amounting to a fall of $1.18 billion over the last six months, analysts at FSDH research said.
“The reserves have been supported by the IMF’s Rapid Financing Instrument of $3.bn and reduced FX demand for international travel amid COVID-19,” Ike Chioke, group managing director, Afrinvest West Africa said on Tuesday.
The foreign exchange market closed on Tuesday with Nigeria’s currency losing 0.21 percent or N1 to N483 as against N482 on Monday on the black market.
The renewed pressure on the naira was as a result of increased demand for dollars fuelled by activities of speculators, amid a shortage of the greenback.
Naira steadied at N480 to the dollar on Tuesday at the Bureau De Change (BDC) segment of the market.
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At the Investors and Exporters (I&E) forex window, Naira remained stable at N395.00 per dollar. Analysts at FSDH Research said most participants maintained bids between N384.00 and N404.11 per dollar.
The official exchange rate has depreciated by 19.0% in 2020. The premium at the parallel market is at the highest level since the first quarter (Q1) of 2017, according to Chioke.
At the money market, the CBN is scheduled to offer NT-Bills worth N50.93 billion across the 91-day (N4.41 billion), 182-day (N7.82 billion), and 364-day (N38.70 billion) tenors on Wednesday. Demand at the Primary Market Auction is anticipated to remain elevated with investors positioning more concentrated on the long end tenor.
The FSDH report noted that NT-Bills secondary market closed on a flat note on Tuesday, with the average yield across the curve remaining unchanged at 0.12 percent. Average yields across short-term, medium-term, and long-term maturities closed flat at 0.06 percent, 0.09 percent, and 0.18 percent, respectively.
The Overnight (O/N) rate declined by 0.33 percent to close at 1.33 percent on Tuesday as against the last close of 1.66 percent on Monday, and the Open Buy Back (OBB) rate also declined by 0.58 percent to close at 0.83 percent from 1.41 percent on the previous day. The system liquidity is expected to remain buoyant, barring any significant liquidity mop-up by the CBN.
