by Lekan Olanrewaju
According to information on the CBN website, Nigeria’s foreign exchange reserves have risen by seven percent to $37.534 billion. The bank has stated that one of its key aims is to shore up reserves to protect against shocks.
The figure is up from $34.9 billion on March 19 and from $34.8 billion last year.
According to Reuters, the recent signing of onshore oil production license renewal between Nigeria and U.S. energy major Exxon is likely to have contributed to the forex boost. The 20-year extension is worth billions of dollars and would have included a sizeable, undisclosed signature bonus.
The increase was also attributed to the removal of the subsidy on petrol, which sparked nationwide protests earlier this year.
“The news is encouraging,” said Razia Khan, Head of Africa Research at Standard Chartered Bank. “Confirming our belief that since reforms allowing for the partial lifting of the fuel price subsidy, we have seen a more rapid pace of accumulation of forex reserves.”
“Investors will inevitably wonder what the implications are for the forex rate.” he added. “Given that the central bank wants to see a faster pace reserves accumulation, we doubt that there will be any immediate move to change the forex band.”