Nigeria’s FX reserves seen falling below $30bn, prompting another rate hike

By bne IntelliNews December 17, 2014

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. 

Read in IntelliNews Pro
Get IntelliNews Pro

Related Articles

Nigeria set to approve Seplat's acquisition of ExxonMobil assets within two weeks

The Nigerian government is poised to greenlight ExxonMobil's $1.28bn asset sale to Seplat Energy within the next two weeks, pending resolution on critical issues related to decommissioning and host ... more

Atlantic Lithium approved to list on Ghana Stock Exchange (GSE)

Atlantic Lithium Ltd., an African-focused lithium exploration and development company targeting to deliver Ghana's first lithium mine, has been approved to list on the Ghana Stock Exchange (GSE), ... more

Uncut diamond giant Alrosa must sell stake in Angola's Catoca, Russian deputy FM says

Russian uncut diamond major Alrosa will have to sell its stake in Angola's Catoca diamond mining company owing to the latter's concerns about the prospects for collaborating with the sanctioned ... more

Follow Us On

Most Read

  1. Shocking trial of ex-minister has shifted domestic violence attitudes in Kazakhstan, says brother
    3 days ago
  2. Cheap Russian drones overwhelm US-made Abrams tanks, taken out of action
    9 days ago
  3. COMMENT: Aliyev continues to block the chance of peace in the South Caucasus
    6 days ago
  4. Russia is producing weapons at a record pace, and Ukraine’s partners are trying to increase support for Kyiv
    4 days ago
  5. Central European populism bites the hand that feeds it
    5 days ago
  1. Albanians campaign on social media to keep bus bridge created in freak accident
    2 years ago
  2. Saudi Arabia to scale back plans for Neom city
    25 days ago
  3. Iran vs Israel: Who is better equipped for war?
    22 days ago
  4. Leading emerging markets move rapidly up World Bank’s PPP GDP and FDI confidence rankings
    26 days ago
  5. Oil continues to flow to Israel via Turkey despite Erdogan’s vehement speeches on plight of Gaza
    6 months ago

Reports

Dismiss