The naira continued its downward trajectory this week. Specifically, naira depreciated at the interbank segment by 3.45 percent to N300/$; and by 3.56 percent to 378/$ at the parallel segment. Despite the CBNs effort to support the naira with Forwards and FOREX futures, the excess demand for dollar continues to put pressure on the naira. Looking forward, the stabilization of exchange rate depends on the ability of the CBN and government to attract capital inflows; particularly by raising interest rate, tackling inflation and supporting economy recovery.

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.