The external reserve increased week-on-week by 2 percent to $26.3 billion on January 6, 2017. The increase was likely triggered by continued marginal rise in crude oil price, which moderated oil revenue in the review week. The recent rise in crude oil price is likely to be maintained in the short term given the recent oil production cut deal by OPEC members. Thus, the Nigerian government should target short term increase in crude oil production to fully take advantage of Nigerias exemption from oil production cut and potential rise in oil prices.

The external reserves decreased week-on-week marginally by 0.2 percent from June 9, 2017 to June 16, 2017. The reserve declined from $30.27 billion to $30.21 billion. Given that crude oil revenue constitutes the most part of the reserve, the decline may be reflective of the week-on-week drop in global crude oil price (Crude oil price fell by approximately 2 percent to $47.377 per barrel as at June 16 2017). The ongoing forex intervention by the monetary authority also poses a challenge to foreign reserve conservation. Given the unimpressive performance of global oil prices in recent time, there is need to explore other areas with great potentials to generate foreign exchange earnings. Diversification of forex earnings remains the key to insulating foreign reserve against fluctuations in global commodity prices. The country can tap into solid minerals sector as alternative source of foreign exchange. Huge investment together with investor-friendly policies in solid minerals would make the sector attractive to investors.

Activities in the manufacturing sector remained at levels recorded in 2016Q3. Specifically, manufacturing capacity utilization (a measure of potential manufacturing output that is actually realized) remained at 48.46 percent in 2016Q4 below average. During the quarter, structural bottlenecks such as epileptic power supply (average of 2, 548 Megawatts) in addition to forex constraints, hampered manufacturing activities. As such, high cost of raw materials and cost of production subdued activities in the short term. Recent efforts by the monetary authority to increase forex access to the manufacturing sector as well as improvement in gas supply and electricity generation would help minimize production costs and enhance production process.