Nigeria’s external reserves made a reversal in July from the downward trend experienced in the previous two months, as it rose marginally to $33.38 billion.
According to data from the Central Bank of Nigeria (CBN), the balances in the reserves rose by $60 million to $33.38 billion from $33.32 billion at the end of June.
The marginal increase followed $300 million accretion to the reserves in a two weeks upward trend from $33.08 billion on July 12, Vanguard reported.
Previously, the reserves dropped consistently for three months, from $35.25 billion on April 16 to $33.08 billion on July 12th, indicating $2.17 billion depletion or 6.2 per cent decline.
The external reserves have recorded a year-to-date (YtD) cumulative decline of $1.99 billion or 5.6 per cent from $35.37 billion it recorded on December 31st 2020.
This marginal increase recorded in July is expected by analysts to persist in the second half of the year (H2’21), flowing from the expected Eurobond issuance by the federal government, increased crude oil production and higher crude oil prices.
Analysts at United Capital Plc, said: “We expect the Federal Government to proceed with the issuance of Eurobonds following the external debt proposal of $6.2 billion expected to be approved by the National Assembly. We estimate Eurobond issuances at around $3 billion, while the balance may be financed by more multilateral borrowings. These dollar inflows are expected to supplement inflows from pre agreed multilateral borrowings, providing a boost to external reserves.
“Furthermore, crude oil production is expected to improve later in H2-2021. According to data from the National Bureau of Statistics (NBS), average crude oil production in Q1-2021 printed at 1.72 million barrels per day (mb/d), higher than Q3-2020 and Q4-2020’s 1.67mb/d and 1.56mb/d.
“In addition, crude oil prices continue to surge higher with average Brent crude price printing at $65.2 per barrel in H1-2021, 54.9 per cent higher than H1-2020’s $42.1/bbl. Thus, we expect improved dollar inflows from oil proceeds in H2-2021, providing a further buffer for external reserves.