As the naira plunges further, external Reserves hit two month high

According to the data, the gross component of the reserves climbed to $34.1 billion at the start of September while the liquid portion resumed the month at $33.84 billion.

It was the first time the reserves would hit $34 billion since June 8, 2021, when the composite figure stood at $34.07 billion.

The figures dipped to around $33 billion, raising concerns about the country’s ability to fund its rising imports. The recent rise came a few weeks after the board of governors of the International Monetary Fund (IMF) approved the allocation of $3.35 billion to the country as part of its new $650 billion special drawing rights (SDRs) to member countries.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” Managing Director of IMF, Kristalina Georgieva, had said of the allocation created to assist countries suffering from reserves liquidity crisis.

The rising reserves put the apex bank in a more comfortable position to defend the troubled naira and meet import obligations.

While the external reserves appear bullish, the reverse is the case for the domestic currency, which plunged to a new low at the black market.

According to information sourced from the market, the naira traded around N527/$ band in defiance to the assurances by the CBN and the Bankers’ Committee that the tension at the black market would ease out as banks take a hold of the market.

The Central Bank had earlier stopped the funding of bureau de change (BDC) operators while handing over the sale of foreign exchange (FX) solely to banks, who have been warned to ensure that individuals with genuine need of business personal travel allowances (B/PTAs) are not denied.