Nigeria has successfully hit the $45 billion mark after the ups and downs that made it a seemingly insurmountable feat.
This came after the reports of declines in foreign reserves which can be attributed largely to the fluctuations in oil prices. In the early part of this month, the foreign reserves increased to $44.7bn and further increased to $45bn with a short span of 3 weeks.
Cumulating into a total of $212.2m before the end of the month. The oil sector, being the mainstay of the economy had a strong effect on the decrease according to analysis, as the fluctuations instigated the decline which had started since the late part o the previous year, September 2018.
Before this breakthrough, the reserves fluctuated between $41bn and $44bn. The Organisation of the Petroleum Exporting Countries’ (OPEC) decision to hold back on oil supply to enable a ripple effect of increment in price went a long way to heal the shaky reserves. Oil price made a rebound to a $73pb after recording a low of $53.21pb in January 2019, making progress in April to $70p/b.
Oil prices have also skyrocketed and are still expected to continue on its bullish run due to the revised International Maritime Organisation rules and the heat in the Middle East; circumstances that fuel the increase. These activities pose as good fortune in disguise as they further strengthen the naira especially now that OPEC has announced that it may maintain its stand to hold back on production.
According to Reuters, the Saudi Energy Minister, Khalid al-Falih, said the members of the OPEC and allied oil producers have agreed to ‘gently’ drive down crude inventories. Furthermore, he said he would be attentive to the needs of a ‘fragile market’.
Asides the oil sector, the Presidential Initiatives on Continuous Audit (PICA) has played a significant role in contributing to the foreign reserves. According to Mrs Zainab Usaman, Nigeria has been able to save N8.03 billion from the unearthed total of N603.78bn garnered from whistleblowing.
Also, the CBN was able to sell a high $36.6 billion in Forex as opposed to that of 2017, which pales in comparison ($15.8 billion), a 130% increase. The CBN Governor, Godwin Emefiele, explained that;
“The increased volume of transactions in 2018 was attributable largely to the bank’s foreign exchange policy and its management, coupled with the improvement in the levels of foreign reserves during the year.”
He also pointed out that;
“Nigeria’s current stock of external reserves can finance nine months of current import commitments. With improved availability, of foreign exchange, the exchange rate at the I & E FX window has remained stable over the past 24 months at an average of N 360/$, and the parallel market exchange rate has appreciated from N525/$ in February 2017 to N360/$ today,”.
According to expert forecasts, the reappointment of Mr Godwin will definitely see the I&E window experiencing a level of stability.