…As FG Investigates Application Of $3.3b Afrexim Bank Loan
Hope seems rising for the Nigerian economy, particularly as it relates to her perception and ratings by both local and international investors as her foreign exchange (FX) reserves have surged to their three month highs.
Coming at a time that the market seems to be witnessing relative stability in exchange rate , hovering around N1500/$, according to analysts, portends significant achievement with potential milestones.
According to the latest data published by the Central Bank of Nigeria (CBN), the reserves now stand at $33.58 billion as of June 19, 2024.
This achievement represents a notable recovery since the end of March 2024 when it was as high as $33.83 billion before a period of decline set in.
The rise in FX reserves comes after three months of noticeable fluctuations when it plunged to a low of $32.11 billion on April 19, 2024, sparking concerns about the nation’s financial stability.
Although the governor of CBN, Yemi Cardoso had consistently denied assertion that part of the reasons for the depleting reserves was the fact that it was being used to defend the naira..
This is beside the fact that we are operating an import dependent economy, where virtually, everything is being imported, causing a heavy strain on the nation’s foreign reserves.
Specifically, CBN’s data shows that forex reserves have risen by 5% or $1.47 billion In the last two months.
The CBN data show that the FX reserves rose from $32.11 billion on April 19, 2024, to $33.58 billion by June 19, 2024.
This growth represents a substantial boost for the country’s external reserves, as the apex bank continues to implement policies that attract forex liquidity.
However, some analysts say the fact that most of the accretion are coming from foreign portfolio investors, rather than foreign direct investments, leave much to be desired since the former is considered by most analysts as ‘hot money’ with shorter life span as the investors could decide to leave without prior notice.
However, other analysts see it as a commendable effort reflecting growing confidence in the economy, despite the alleged short Stay in the economy.
However, at the last Monetary Policy Committee meeting, members had individually in their contributions urged CBN to intensify efforts and as well sustain achievements with the little accretion to the reserves.
Consequently, Cardoso had recently announced concerted efforts by the Bank towards boosting the external reserves, part of which was devicung strategies to double the diaspora remittance inflow this year.
ALSO, the federal government, through NNPCL recently secured a $3.3 billion crude oil backed loan agreement with Afrexim Bank last year for which disbursements are been made in tranches.
The package was basically to bolster the value of the local currency, but for which no recorded achievements have yet to be made.
Metrobusinessnews.com gathered that, the federal government is currently investigating the usage and application of the funds meant to bring respite to the local currency.
