External reserves to drop below $45bn in Sept
Nigeria’s external reserves are projected to fall below $45 billion at the end of September, the lowest in six months.
Last week, the reserves maintained downward trend for the eight consecutive weeks, dropping below the $46 billion for the first time in five months.
Data from the Central Bank of Nigeria (CBN) showed that the reserves fell last week by $292 million to $45.874 billion on Thursday from $46.166 billion Thursday of the previous week.
Financial Vanguard analysis revealed that the external reserves had declined persistently by $1.92 billion since July 5, 2018 when it began peaked at $47.798 billion, implying average weekly decline of $240 million. Further analysis revealed that the reserves fell by $1.245 billion in August.
The persistent decline is driven by outflow of dollars by foreign portfolio investors exiting the nation’s debt market and increased dollar supply by the CBN in a bid to stabilise the naira exchange rate in the face of increased demand for dollars.
With the apex bank expected to continue to maintain
weekly dollar injection to defend the naira, Financial Vanguard analysis projects the reserves will maintain weekly decline in September. Hence the reserves are projected to drop by $962 million to $44.91 billion at the end of the month.
Naira depreciates as I&E turnover rises by 68%
Meanwhile, the naira depreciated in the parallel market and in the Investors and Exporters (I&E) window last week even as volume of dollars traded in the window rose by 68 percent.
The naira depreciated by 70 kobo in the parallel market and by 29 kobo in the I&E window.
According to naijabdcs.com, the live exchange rate platform of the Association of Bureaux De Change Operators (ABCON), the parallel market exchange rate rose to N359 per dollar last week from N358.3 per dollar the previous week translating to 70 kobo depreciation for the naira.
Data by the FMDQ showed that the indicative exchange rate for the I&E window rose to N362.64 per dollar last week from N362.35 per dollar the previous week indicating 29 kobo depreciation for the naira
However, the volume of dollars traded in the window rose by 48 percent last week to $1.42 billion from $840.56 million the previous week.
Last week the CBN maintained its weekly injection of $210 million in the interbank foreign exchange market, allocating $100 million to the wholesale segment, $55 million to the SME segment and $55 million to invisible transactions.
Economic expansion persist in August-PMI report
Meanwhile, the Manufacturing and Non Manufacturing Purchasing Managers Index (PMI) survey of the CBN for August indicated further expansion in business activities during the month.
According to the PMI report for August released by the apex bank on Friday, out of the 31 subsectors surveyed during the month, 27 recorded expansion while four contracted.
The report stated: “The Manufacturing PMI in the month of August stood at 57.1 index points, indicating expansion in the manufacturing sector for the seventeenth consecutive month. The index however grew at a faster rate when compared to the index in the previous month.
“Of the 14 subsectors surveyed, 13 reported growth in the review month in the following order: electrical equipment; non-metallic mineral products; cement; furniture & related products; plastics & rubber products; textile, apparel, leather & footwear; petroleum & coal products; chemical & pharmaceutical products; paper products; fabricated metal products; printing & related support activities; food, beverage & tobacco products and primary metal. The transportation equipment subsector declined in the review month.
“The composite PMI for the non- manufacturing sector stood at 58.0 points in August 2018, indicating expansion in the Non- manufacturing PMI for the sixteenth consecutive month. The index grew at a faster rate when compared to that in July 2018.
“Fourteen of the 17 subsectors recorded growth in the following order: agriculture; repair, maintenance/washing of motor vehicles; information & communication; water supply, sewage & waste management; educational services; wholesale/retail trade; finance & insurance.