The nation’s external reserves returned to a growth path after gaining $679.12m in June. According to reports obtained from the Central Bank of Nigeria, the reserves, which stood at $38.48bn as of June 2, 2022, rose to $39.16bn as of the end of June 30, 2022.
The reserves had earlier hit a seven-month low after falling to $38.4bn as of the end of May. Analysts at Cordros Research stated that Nigeria’s FX reserves maintained accretion for the fifth consecutive week as the gross reserves position grew.
It stated that, “Although the CBN has enough liquidity to support the FX market over the short- term, we highlight that foreign inflows are paramount for sustained FX liquidity over the medium term.
“Considering the tepid accretion to the reserves given the (1) low crude oil production level and (2) elevated PMS under-recovery costs, FPIs which have historically supported supply levels in the IEW will be needed to sustain FX liquidity levels in the medium to long term.
“Hence, we think (1) further adjustments in the NGN/USD peg closer to its fair value and (2) flexibility in the exchange rate would be significant in attracting foreign inflows back to the market.”
A member of the Monetary Policy Committee meeting, Mike Obadan, at the last meeting had said, “A hiked Monetary Policy Rate could douse the demand pressures in the foreign exchange market and may also spur desired capital inflows/stem outflows as well as boost external reserves.”
According to him, the Nigerian economy had continued to exhibit features which would make monetary policy choices difficult for the policy makers, and in particular, the monetary authority.
Two of these features, he said, were fragile economic growth and escalating inflation.
Others, he added, were high, unstable exchange rate and uncomfortable external reserves levels.
The CBN Governor, Godwin Emefiele, had said to boost forex supply in the country through the non-oil sector in the next three to five years, it had launched the ‘RT200 FX Programme’.
