ICM to the rescue for Reserves

Gross official reserves increased by US$170mn in November to US$42.17bn, and so reversed a trend of four successive monthly declines. We do not have to look far for the explanation: the FGN’s latest Eurobond sales which raised US$2.86bn and are now steadily adding to reserves on a 30-day moving average basis. The figure had risen further to US$42.49bn as of 05 December. The broader change has been the turn in offshore investor sentiment for the worse. The CBN is now regularly the leading supplier of fx at the investors’ and exporters’ window (NAFEX).


  • Reserves at end-November covered almost 16 months’ merchandise imports, and nine months when we include services on the basis of the balance of payments to June 2018. This remains healthy cover by any criteria.
  • Some definitions are required for the sake of clarity, however. The Nigerian data are gross, cover just fx and exclude swap contracts.
  • The South African series in our chart shows the international liquidity position. This measure includes gold and SDR positions at the IMF of about US$7bn combined along with fx and forward commitments, and then deducts swaps and deposits arising from foreign debt issuance.


  • As for the CBE’s data, net international and gross reserves are similar. Egypt is an obvious parallel with Nigeria: both made fx reforms to attract offshore investors and both have tapped the Eurobond market.
  • Our chart shows stable reserves for Egypt since April 2018 and a very recent recovery for Nigeria on the basis of its latest Eurobond sales. Egypt, unlike Nigeria, is a beneficiary of the current softness in the oil price. Its current government also receives substantial balance-of-payments support from its Gulf allies.

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