CBN: Foreign Reserves Spike Amidst Rise In Oil Prices

By Fola James

The Central bank of Nigeria, CBN has revealed a rise in the nation’s foreign reserves by $449.5 million after several months of consistent dip.Figures from the apex bank indicate that the reserves rose from $33.44bn in April to $33.89bn in May.

The reserves had slipped into $33.89bn by the end of April.

The decline in the nation’s foreign reserves has been caused by the reclining oil revenue.

The price of crude oil had dipped to as low as $20 per barrel in the international oil market.

Besides, the Nigerian National Petroleum Corporation, NNPC, said last week that vessels loaded with Nigerian crude are currently stranded on the high seas looking for buyers.

Meanwhile,  the International Monetary Fund, has warned that a further decline in oil revenue could further compound the nation’s fiscal policies.

“The country’s oil exports are expected to fall by more than $26bn,” it stated, IMF stated, adding that “With the decline in economic activity, large fiscal and external financing gaps have emerged. Our baseline scenario is uncertain and subject to heightened risks.

These are mostly linked to a further collapse in oil revenue—due to persistent low oil prices, an inability to sell oil because of depressed global demand, or declining production because of additional OPEC-agreed cuts,” the world’s financial body said.

Meanwhile, financial analysts told the magazine that oil prices are likely to rebound as major economies such as the US, China and Europe open back their economies after weeks of shut down due to the corona virus pandemic.

According to them this could lead to a gradual rise in Nigeria’s foreign reserves depending on fiscal policy direction of the federal government.