MAY 17, 2018: NIGERIAN RESERVES DOWN DESPITE OIL PRICE INCREASE

According to figures obtained from the website of the Central Bank of Nigeria, the foreign reserve of Nigeria dropped marginally for the first time in months despite recent fairly high crude oil prices.

The reserve figure posted on the site for May 15, 2018 read $47.787bn out of which $729.15m was not available for use in payment for imports.

This, however was 0.013% lower than the $47.793bn stated for May 14 2018 and indeed, even though marginal represents first drop in months of steady rise on daily basis.

This daily increase had been engendered by recent increases in the international crude oil price and more effective management of local foreign exchange market even though through numerous windows.

Double digit interest rate deliberately held firm for months now also encouraged inflow of very short funds targeting money market instruments.

Daily increasing foreign reserve has in recent times been good news of sorts for the Nigerian economy that is still struggling to gather momentum after breaking free of recession.

It has been well celebrated as a welcome feat but the fear now is that with just 12 months left to change of government through the ballot box, it is possible that politicians are now putting pressure on foreign reserves through money transfers for political activities.

As at last count Nigerian crude oil sold at $78.73 per barrel, almost double the low of around $40 per barrel around 2015 and 2016.

For now, the main pressures on Nigeria's foreign reserves seem to be direct remittances, debt servicing and letters of Credit, in that other.

The debt service bill is expected to rise further in the years ahead because of deliberate sourcing of fairly cheap foreign debts to repay some local official debts.

Lately too, President Buhari has been more determined to resolve the insurgency and insecurity issues dogging the nation in one way he, as a retired general can trust, buying more planes and equipment for the armed forces to go for broke. This too may have impact on the foreign reserve position as well.

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