By Omodele Adigun
As the Central Bank of Nigeria(CBN) puts the current level of the nation’s external reserves at $36.39 billion, analysts have warned that the offshore savings may plunge below $30 billion in June.
Accoring to analysts at Cordros Securities Limited, the foreign reserves will settle at $29.84 billion by June 2021. Disclosing this reently while unveiling their report, ‘Nigeria in 2021: Positioning in the new normal’, they, projected that the reserves would settle at $32 billion by the first half of the year.
Led by their Head of Research & Strategy, Jolomi Odonghanro, who presented the report, they stated: “Overall, we estimate the FX reserves will settle at $29.84 billion by June 2021, translating to goods and services import cover of 6.8x (seven months), just above the International Monetary Fund (IMF)’s six months minimum requirement for the West African Monetary Zone (WAMZ). With the inclusion of a possible Eurobond issuance (estimated at $2.5 billion), we expect the reserves to settle above $32 billion.”
The latest figures from the Central Bank of Nigeria(CBN) show that the reserves, which commenced the year at $35.65 billion edged up to $36.52 billion as of January 25, before it slipped to the current level.
The apex bank notes that there had been an increase in the level of external reserves, which stood at $36.23 billion as of January 21 compared with $34.94 billion at the end of November 2020.
It states that this reflected improvements in crude oil prices, partial global economic recovery amid optimism over the discovery and distributions of COVID-19 vaccines by most developed economies.
The reserves had experienced declines in recent months due to low oil receipts.
External reserves as of October 30, 2020 fell by 0.3 per cent and 10.2 per cent to $35.58 billion, compared with $35.67 billion and $39.61 billion at the end-of September 2020 and end-of October 2019, respectively.
The decrease was due, mainly, to the CBN’s objective of ensuring predictable macro-economic environment through interventions in SMIS, BDC and I&E windows to stabilise the naira exchange rate.
The external reserves position in October could cover 7.9 months of import of goods and services and 10.6 months of import of goods only, according to the CBN.
It stated that Nigeria’s reserves per capita was $172.60 compared with $174.44 in September 2020.
A breakdown of the external reserves by ownership showed that, the CBN had the largest share of $30.41bn (85.5 per cent) followed by the Federal Government with $5.10bn (14.3 per cent).
