Official reserves stable in January

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Gross official reserves increased marginally by US$60m in January to US$43.17bn. Proceeds of the FGN’s US$2.9bn Eurobond issue in November have long been banked, and the drivers of movements in reserves are oil revenues and the trades of foreign portfolio investors (FPIs).

The oil price has settled around US$60/b and volumes have picked up due to a decline in sabotage. Inflows from FPIs have recovered a little, and have topped the sources of fx supply at the investors’ and exporters’ window (NAFEX) for three of the four weeks this year for which the data are available.

  • Reserves at end-January covered more than 16 months’ merchandise imports, and nine months when we include services on the basis of the balance of payments (BoP) to June 2018. This remains a healthy buffer.
  • Some definitions are required for the sake of clarity, however. The Nigerian data are gross, cover just fx and exclude swap contracts.
  • The South African series in our chart shows the international liquidity position. This measure includes gold and SDR positions at the IMF of US$7.8bn combined along with fx and forward commitments, and then deducts swaps and deposits arising from foreign debt issuance. Its reserves have been remarkably stable and enjoyed a modest boost in January due to an increase in the SARB’s forward position.
  • Official reserves (US$ bn)

    Sources: CBN; South African Reserve Bank (SARB); Central Bank of Egypt (CBE); FBNQuest Capital Research
  • As for the CBE’s data, net international and gross reserves are similar. Egypt’s reserves were stable in January.
  • Egypt and Nigeria have both seen large fx inflows from Eurobond sales and FPIs following reforms in 2017. Additionally, Egypt enjoys substantial inflows from Suez Canal receipts, tourism, non-oil exports and BoP support from the Gulf states.
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