CBN data show that gross official reserves surged by US$2.3bn in January on a 30-day moving average basis to US$28.2bn. The authorities have now achieved reserves accumulation of US$4.2bn over three months. Since they have not shed any light on this marked turnaround, they have fuelled the rumour mill. One such story in circulation is that they have secured some sizeable recoveries. On surer ground we can point to loan disbursements: by the Exim Bank of China in the third quarter and US$600m by the African Development Bank (AfDB) in November.
We understand informally from official sources that the accumulation is explained by a pick-up in crude oil production to 1.90 mbpd from November. The price has been stable over the period, at US$53/b to US$56/b.
We are aware of appearing too trusting/not sufficiently suspicious of official data. However, the trend follows what one should expect: oil revenues increase so reserves increase.
Experience since January 2012 had shown very limited accumulation when the price was consistently above US$100/b and steady depletion when it turned downwards from mid-2014 (Good Morning Nigeria, 19 January 2017).
The accumulation will have stiffened the resolve of the authorities to maintain their exchange-rate policy. Significantly, the CBN has not adjusted its daily sales of just US$1.5m to the banks. If output moves closer to the 2017 budget assumption of 2.2 mbpd, their determination will be still stronger.
Sources: CBN; FBNQuest Research
The accumulation will have stiffened the resolve of the authorities to maintain their exchange-rate policy. Significantly, the CBN has not adjusted its daily sales of just US$1.5m to the banks. If output moves closer to the 2017 budget assumption of 2.2 mbpd, their determination will be still stronger.
