Nigeria’s gross foreign exchange reserves will likely drop to below $30bn by the end of June next year if the oil price trend continues below the $65 per barrel, according to analysts at Lagos-based financial services group BGL, quoted by THISDAY daily. As at December 15, the country’s FX reserves stood at $35.4bn, some $4bn below their level in August, when the naira was hit by the oil price slump, prompting the central bank to use its hard currency stocks to defend it. The
Last month, Nigeria’s central bank devalued the naira by 8%, as well as raised its monetary policy rate by 100bps to a new a record high of 13% in a bid to stop the depletion of FX reserves. However, the stock of FX reserves has narrowed 4.2% since November 25, when the package of measures was announced.
BGL analysts believe that the continued depletion of FX reserves and the threat it poses to macroeconomic stability will trigger a further rate hike to 14% next year “regardless of the pro-growth and pro employment stance” of the central bank governor.
The current level of Nigeria’s external reserves provides approximately 7 months of imports cover, but pressure is remaining in view of the falling oil prices, which considerably reduce the build-up of FX reserves, and capital outflows related to the expected rate hike in the US.
Related Articles
South Africa’s Eskom advances environmental studies for potential third nuclear power station
South Africa’s state-owned utility Eskom has initiated environmental impact assessment (EIA) work to evaluate two potential sites for a future nuclear power station at Thyspunt on the Eastern Cape ... more
Perseus Mining launches binding bid for Predictive Discovery to boost West Africa gold growth
Perseus Mining (ASX/TSX:PRU) has issued a definitive binding offer to acquire all the shares in Predictive Discovery (ASX:PDI) that it does not already own, valuing the Guinea-focused gold explorer ... more
Africa Bitcoin Corporation widens cross-border footprint with Frankfurt listing, multi-exchange strategy
Africa Bitcoin Corporation (ABC), formerly Altvest Capital Limited, has listed on the Börse Frankfurt Quotation Board. The move marks the South Africa-based Bitcoin treasury and SME-finance firm’s ... more
Most Read
-
The birth of a Kazakh banking empire: ATF Bank
3 years ago
-
India’s smart metering push gains momentum
4 months ago
-
The birth of a Kazakh banking empire: ATF Bank
3 years ago