Foreign reserves hit $28b, CBN warns banks over failed settlements

Central Bank of Nigeria

Central Bank of Nigeria

• ‘$1. 54b capital imported into Nigeria in 2016 Q4’

Nigeria’s foreign reserves have grown to $28.12 billion, according to the latest figures from the Central Bank of Nigeria (CBN) for January 2017. The reserves fell to $23.95 billion in October 2016, stoking fears among foreign investors on the country’s ability to settle dollar-denominated obligations in the midst of falling crude oil prices.

But with the return of stability in crude oil price since November 2016, CBN has kept its intervention volume steady, choosing to save about $4.2 billion, which has raised the reserves’ profile and improved outlook.

In another development, the Central Bank of Nigeria (CBN) yesterday, warned that payment of auction must be given priority and when it fails, must be backed up immediately by collateral as it will automatically become Intra-day Liquidity Facility.

The circular signed by the Director of Financial Markets Department, Dr. Alvan Ikoku, said that the collateral, which usually is certificate of previous securities held will be converted to Standing Lending Facility (SLF) by the close of business if not settled and charged at prevailing rate (16 per cent), plus five more per cent.

Still, if the SLF is not repurchased by the next business day, the bank will now be barred from the CBN’s Discount Window until the obligation is settled in accordance with the extant law.

The apex bank is raising its supervisory level of the banks, just as it also queried some banks that turned in inaccurate data for foreign exchange utilisation.

The Acting Director of Corporate Communications Department, Isaac Okorafor, explained that the decisions were guided by CBN’s desire to strengthen financial system’s operations.

After a speculative attack on the naira on Monday, exchange rate at the parallel market has appreciated to N495 per dollar from the all-time low of N500 per dollar.

At the interbank market, the rate remained stable at N305.25 per dollar and supported by the daily dollar auction intervention of $1.5 million by the Central Bank of Nigeria.

Meanwhile, the National Bureau of Statistics (NBS) yesterday said that the total value of capital imported into the country in the fourth quarter (Q4) 2016 is $1.5488 billion.

The amount represents a decrease of 15 per cent when compared to import of the third quarter and a decrease in value by 0.52 per cent relative to the fourth quarter of 2015.

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  • Mazi JO

    Things are bottoming out. Brace yourselves for stability. The CBN is on the right tracks for making savings a priority. It ‘ll be very hard on Banks initially but the industry will stand to flourish in the quarters ahead. In all we have something to brag about after seasons of flat economic growth. Stay the course but remember that nothing is written in gold. Policies in any economy are as good as how long they are effective. Again, find a way to revamp the manufacturing base. Something must be done to whet that appetite. I read the other day of the possibility of reducing lending rates for them. Nothing could be more enticing. Local production lacks critically that’s the reason our Naira is mired in perpetual shedding of intrinsic value.

  • real

    The central bank is still enforcing the wrong regulation. There is a need to ensure that banks are not being speculators with the forex they purchase. It is due to the banks and some forex speculators that we have an official rate and a black market rate that is the actual real price of dollar. until this central bank starts to deal with the reality on the ground, the economy would not progress. There oppressive interest rate is killing businesses, their blind eyes to banks fraudlent operation of forex is creating forex speculation and abuse, and there very expensive inflation fight is a very expensive wrong approach. The only good thing the central bank has done is to ban those 41 items we can produce from forex. however that needs to be reviewed to ensure that no actual basic raw material is included.