Foreign Reserves Build Up Despite Naira Volatility

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Nigeria’s foreign exchange reserves have shown a steady recovery, adding $195.01 million to reach $32.64 billion by the end of the weekend. This marks the fourth consecutive increase in reserves, which had been declining the previous month. The reserves had previously grown by $89.76 million, $132.68 million, and $10.76 million in successive weeks.

Despite the rise in reserves, the naira depreciated by 2.1% to N1,497.33 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM). The Central Bank of Nigeria (CBN) intervened three times during the week, selling a total of $211 million to support the market. Total turnover at NAFEM increased by 33.6% to $1.14 billion, with trades occurring within the N1,301.00 and N1,593.00 per dollar range.

Experts are optimistic that the continued buildup of forex reserves will enhance liquidity in the forex market. Analysts at Cordros Capital Group noted that market liquidity improved last week due to increased forex supply from the CBN and renewed interest from foreign portfolio investors. They believe that changes in forex management rules, along with steady improvements in crude oil production and global oil prices, could help stabilize Nigeria’s forex situation.

Mr. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management, emphasized that the rising reserves will support government efforts to foster liquidity and stability in the forex market.

Source: The Nation

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