The steady increase in the nation’s external reserves in recent weeks has been attributed by analysts to inflows from International Money Transfer Operators (IMTOs) as well as a marginal increase in oil production.
Nigeria’s external reserves have been under pressure since the price of oil- (the commodity that brings in over 90 per cent of the country’s foreign exchange earnings) slumped in mid 2014. But from November 1 to November 11 2016, the reserves rose by $149million to stand at $24.09billion.
In a note obtained by New Telegraph, analysts at FSDH Research pointed out that even though demand pressure on the external reserves occasioned by low foreign exchange receipts persisted in October 2016, the reserves recorded consistent increase towards the end of October 2016. According to the analysts, “the recent accretion to the external reserves started from October 20, 2016.
The inflow from international money transfer operators was the major reason for the increase in the external reserves. There was also a marginal increase in oil production, which also boosted the external reserves.
The 30-day moving average external reserves declined by 2.36 per cent to $23.95billion as at end-October 2016, from $24.53billion at end-September 2016.”
“It increased by 0.21per cent to $23.95billion as at October 31, 2016 from $23.90billion on October 20, 2016. The average external reserves stood at $29.1billion in October 2016, from $24.9billion in September 2016,” the analysts added.
Continuing, the analysts stated: “We observed inflows from the international money transfer operators in October 2016 and it had positive impacts on the value of the naira.
The naira appreciated by 2.35per cent at the parallel market to close at $1/N468 at end-October 2016 from $1/N479 as at end-September 2016.” As part of efforts to boost forex availability in the system, the Central Bank of Nigeria (CBN) on July 22 issued a circular directing commercial banks that are agents to approved IMTOs, to begin selling foreign currency accruing from inward money remittances to licensed Bureaux De Change (BDC) in the country.
Industry analysts believe that the move would help check naira depreciation on the parallel market. According to data published by the World Bank’s Migration and Remittances Factbook 2016, remittances from Nigerians living abroad hit $20.77 billion in 2015, making the country the sixth largest recipient of remittances in the world