Nigeria’s gross foreign reserve over the last few months has hovered around the $38 billion/$39 billion corridor. Despite the rising crude oil prices during these periods, the nation’s foreign reserve did not improve significantly owing to crude oil vandalism and bunkering in the Niger Delta, and the inability of the country to increase its non-oil export earnings. Every uptick in the foreign reserve movement is later offset by a downturn.
According to data from the Central Bank of Nigeria (CBN), the gross foreign reserve recorded the fourth decline since the beginning of this month to stand at $38.95 billion as of August 8, 2022, declining by $93.9 million (0.24 percent) from $39.05 billion recorded on August 5, 2022.
The foreign reserve, which began this month on a negative note, has so far declined four times. However, it rose on the 3rd and 4th of this month. Generally, the foreign reserve base has made the CBN unable to sell the dollar at the pegged price of about N420/$1 to all seeking the dollar, causing a widening premium in the black market.
The gross reserve recorded a decline of $1.6 billion (4 percent) year-to-date, having dropped from the $40.52 recorded at the beginning of the year. However, on a year-on-year basis, it rose by $5.4 billion (16 percent) from $33.57 billion recorded at this same time in the previous year.
Foreign Exchange Market
Tuesday, August 9, 2022: The Nigerian Investors and Exporters (I&E) FX Window closed the trading session on a positive note as the naira to dollar exchange rate stood at N428.75/$, implying an uptick of 0.5 percent from the previous day’s closing price (N431). Also, the naira rose by 0.2 percent from the opening price (N429.58/$1) recorded as of the beginning of the trading session.
An exchange rate of N444/$ was the highest rate recorded during the intra-day trading before it settled at N428.75/$ at the end of the trading session, while it also traded as low as 417/$ during intra-day trading. According to data from FMDQ, a total of $113.64 million was traded at the Investors and Exporters (I&E) Window for the reporting period, representing a decrease of 1.8 percent from the $115.67 million traded the previous day. The appreciation in the value of the naira by the end of the trading session came despite the decrease in dollar supply to the market.
In the parallel market, the dollar strengthened against the naira. As of the close of trading yesterday, it depreciated to about N665/$ at the parallel (black market), dropping by N5 against the dollar compared to the previous day’s price. Historical rates show that on a week-on-week basis, the price of the naira against the dollar stabilized as it maintained the N665/$ exchange rate. Trading activities at the B2B market show that the exchange rate closed at about N670/$ for the same period being reported. This is based on the information obtained from BDC operators in Lagos.
Capital Market Update
As of August 9, 2022, the Nigerian equities market closed the trading session with the NGX All Share Index (ASI) declining by 226 basis points (bps) to close at 49350.71. The trading volume was 140,610,346 units, increasing by 315 percent from 33,877,639 units recorded at the end of the previous day’s trading. The total value that exchanged hands was N1,600,148,807.72, representing a 277 percent increase from the value ( N425,003,000.01) at the close of the previous day of trading.
The indices for some sectors under our review increased while others recorded a different performance. Banking and Insurance recorded a bullish performance as the two indices closed in green, while Pension, Consumer Goods, and Oil and Gas closed in red after a decline in their indices. The Banking index rose by 60 basis points (bps), and Insurance by 24 bps. The Oil and Gas index declined by 27 bps, Consumer Goods by 29 bps, and Pension had the highest decline, by 148 bps.
PRESTIGE and NEM stocks led the top gainers as they both rose by 10 percent, while CORNERST led the top decliners after dropping by 9.33 percent. JAPAULGOLD was the most traded by volume as 23180182.00 units of its shares were traded at N8951218.33. On the other hand, GTCO emerged as the most traded stock value as 7850003.00 units of its shares were traded at a value of N146,872,654.70.
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