Gross Official Reserves Decline by US$20m in June 2016


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. 

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1.       Official Reserves decline by US$700m in May 2016

2.      Official Reserves Decline by US780m in April 2016

3.      Some better news on reserves; Increases by US40m in March 2016

4.      A slowdown in reserves depletion by US$340m in February 2016

5.      Continuing Depletion of Federal Reserves

6.      Some comfort beyond the US$30bn reserves tipping point – Jan 06, 2016

7.      Another decline in federal reserves – Dec 07, 2015

8.     Marked decline in reserves in September – Oct 08, 2015

9.      Reserves stable in August – Sep 03, 2015

10.   Reports of a recovery in reserves – Jul 09, 2015

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