Macroeconomic Report & Economic Updates

March 22, 2016

Nigeria Economic Update (Issue 12)

The naira/dollar exchange rate remained largely stable at the parallel
market at ?320/$ during the period7, albeit slight
fluctuations on February 29, 2016 (?325/$) and March 2, 2016 (?328/$). The
decline in the hoarding of foreign currency as well as the substantial
reduction in the speculative demand for dollars were the two key factors
responsible for the ease of fluctuations in the forex market8. With the slight
increase in the price of crude oil, Nigerias foreign reserve slightly grew by $56 million, from 27.81 billion to $27.84 billion9.
With the continued increase in the price of crude oil, a modest build-up of
foreign reserve to guard against unfavourable commodity price movements is
expected in the near term.

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Nigeria Economic Update (Issue 1)

Nigerias external reserves improved in 2017. The reserve stood at approximately $39 billion as at the end of December 2017, up by about 50 percent from the $26 billion at the beginning of the year 20172. The surge in reserve was particularly boosted by increased capital importation, and crude revenue earnings prompted by a relatively higher crude oil price and improved domestic production. Given that the recent uptick in external reserves is still largely associated with improved crude oil price, efforts should be geared towards conserving current reserve gain so as to cushion future external shock. In the medium term, there is need to diversify export earning away from oil so as to mitigate the effects of volatility in crude oil prices.