Dear Esteemed Client:
The nation’s FX reserve levels appreciated day-on-day for the first time since 07 July, gaining ca $5.88million day-on-day, an apparent sign of some recovery, data from the Central Bank of Nigeria (CBN) indicated on Tuesday. This can be attributed to recent moves by the Apex bank to retain interest of Foreign Portfolio Investors (FPIs) in the nations short term fixed income assets, despite increasing global risk-off sentiments and flight to safety by global investors. The CBN had restricted trading on its Open Market Operations (OMO) treasury bills to only Deposit Money Banks (DMBs) and FPIs, which it offers at yield levels above 15% in a bid to retain ca ₦1 trillion of maturing OMO treasury bills for FPIs in the remainder of 2019.
Looking ahead, we are of the view that the recovery of the nation’s reserve level would be short lived. We expect further decline in the near term, below the $40billion mark on increasing global investors risk-off amid uncertainties of a resolution of U.S./China trade tensions, global growth in 2020, and expectation for crude oil prices to remain around current levels of ca $60 – $65 per barrel. Read more