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
Guinea-Bissau soldiers announce seizure of power as post-election tensions deepen
Soldiers in Guinea-Bissau appeared on state television on Wednesday (November 26) saying they had seized power, hours after gunfire was reported near the presidential palace in Bissau, three days ... more
Guinea-Bissau president says coup attempt underway as gunfire erupts in capital
Guinea-Bissau’s President Umaro Sissoco Embaló said on November 26 that a coup was underway in the country, telling Jeune Afrique he had been detained by soldiers at the presidential palace in ... more
Vodacom taps Google Cloud to accelerate AI-driven transformation across Africa
Vodacom (JSE:VOD) has signed a strategic collaboration agreement with Google Cloud, enabling the South African operator to deploy advanced AI and data-analytics tools across its African markets. The ... more
Most Read
-
US expands oil sanctions on Russia
1 month ago
-
India’s smart metering push gains momentum
4 months ago