Thursday, July 14 2016 9:08AM /FBNQuest Research
Data from the CBN show that gross official reserves declined by US$20m in June on a 30-day moving average basis to US$26.4bn. The monthly average has been an outflow of US$430m since the one-off bonus of July 2015, when the CBN acquired the US$2.5bn fx deposits of government departments and agencies.
We had anticipated a larger outflow in June, given that oil revenues were at best flat and that the CBN launched its new exchange-rate regime on 20 June. Market analysis, however, does not have access to all the data.
A popular talking point has become the level of net official reserves. One measure would be gross reserves net of federal external debt, which amounted to US$10.7bn at end-December.
Another measure would be net of the CBN’s forward obligations. These include the CBN’s forward sales totaling US$3.49bn on 20 June (including US$700m on a one-month basis) in what cleared, it said, the fx backlog. We note also reports of fx swaps with the DMBs dating from early 2015.
We understand that the CBN’s fx spot sales over a week are now comparable to the figure of about US$200m when it operated the previous managed rate of N197 per US dollar.
Without an unlikely recovery in the oil price, the driver of fx availability (and indirectly, reserves) will be the extent to which CBN sales are supplemented by inflows from autonomous sources such as offshore portfolio monies.