By Babajide Komolafe

Buoyed by the recent surge in
the price of crude oil, the nation’s external reserves   last week recorded the first week-on-week, WoW, increase in 16 weeks, rising   to $39.836 billion. 

Data from the Central Bank of Nigeria, CBN, showed that the external reserves rose to $39.836 billion on Wednesday February 23rd, representing a $55 million WoW   increase   from $39.781 billion Wednesday February 16th,   the previous week.

The above, which represented the first WoW increase since October 29th last year, followed a 15 weeks persistent decline, during which the reserves fell by $2.05 billion to $39.776 billion on February 14th, driven by increased dollar sales by the CBN in its bid to stabilise the official exchange rate around the N415 per dollar mark.

READ ALSO: NNPC confirms $224.29m receipt from crude oil export in August

Financial Vanguard  analysis showed that the rise in external reserves is driven by increased dollar inflow courtesy of the sharp increase in price of crude oil, which accounts for 80 per cent of the nation’s dollar earnings.

Analysis showed that Nigeria’s Bonny Light crude oil   gained 33.6 per cent increase in price, year-to-date, rising to   $101.88 per barrel(pb) last week   $76.25pb   at the end of December last year.

While projecting further increase in the external reserves, analysts at Financial Derivatives Company, FDC, said that the rising trend in the price of crude oil will enhance support for exchange rate management.

Making this projection in the company’s Unity Bank monthly digest, the analysts said: “The gross external reserves ended its one month losing streak by gaining $50 million   to close at $39.83 billion as at February 22nd.

“This can be attributed to higher oil prices, which have crossed the $100pb mark. The import cover has fallen by 0.11% to close at 9.04months.

“We expect the naira to keep trading at current levels as the CBN maintains its gradual intervention efforts.

Higher oil prices will support gross external reserves accretion and this would provide support for exchange rate management.”

Vanguard News Nigeria