Eight billion dollars has been added to Nigerian foreign reserves in 10 months of the year, making an increase of 30.9 per cent, InsideBusiness Online data shows.
The addition is spurred by a hike in global oil prices as well as the increasing activities in the investor-exporter window. The foreign reserves opened at $25.84 in January and closed 31 October 2017 at $33.83 billion.
An InsideBusiness Online analysis indicates that several negotiations within the Organisation of Petroleum Exporting Countries (OPEC), a basket of 14 crudes countries, resulted in 9.9 per cent gain. The price made an upward movement from $53.3 early in the year to $58.57 per barrel 31 October.
Global oil prices that continue to rally around $60 per barrel extended to new heights Wednesday 1 November with Brent crude climbing to a level last seen in mid-2015. This development has given hope to the industry after a three-year slump.
An oil price recovery has been under way since June as crude demand starts outpacing supply, with Brent rallying by almost 40 per cent to $61 a barrel. This is a pointer that the global oil glut that had built up in the past years has started to draw down.
With Foreign reserves at $33.83 billion, Nigeria has stepped up two-half year high this year amid foreign exchange intervention for the various exchange markets by the Central Bank of Nigeria (CBN).
For the third quarter of 2017, the external reserves gained $7.53 billion, or 29.2 per cent, from $25.8 billion in January to $33.83 billion, which is the highest in almost three years.
CBN spokesman Isaac Okorafor has attributed the boost in the foreign reserves to peace in the oil-rich Niger-Delta region of the country, reflecting increased oil output and earnings.
He says with the sustained interventions, the apex bank pushed foreign exchange demand away from the parallel market into the formal regulated market.
In the second quarter, the oil sector grew significantly by 17.04 percentage points from -15.40 per cent recorded in the first quarter of 2017 to 1.64 per cent, owing to the calmness in the Niger-Delta region.
The nation’s economy, which recently exited from a recession, is on a sure footing as data from the National Bureau of Statistics (NBS) shows that the Gross Domestic Product (GDP) expanded by 0.55 per cent in second quarter of 2017. This growth in GDP was driven mainly by the oil & gas sector.
Between January and September 2017, the foreign reserves gained $7.53 billion, or 29.2 per cent, from $25.8 billion in January to $33.33 billion.
Between January and August, the foreign exchange buffer of the CBN appreciated by about $5.97 billion. Statistics on the CBN website put the external reserves increased by 17.2 per cent from $25.84 billion it opened this year to $30.29 billion on 30 March 2016.
Specifically, the external reserves for the first time in 2017 hit $30 billion on March 8, hovering around $29 billion and $28 billion in February.
OPEC price basket of 14 crudes had closed at $50.04 a barrel in March 2017. The federal government had benchmarked the 2017 budget on 2.2 million barrels per day at $42.5 per barrel in the global market.
Finance experts agree that the steady increase in global oil prices will impact the CBN’s foreign exchange buffer and rub positively on the nation’s economy.