FX Auction: Nigeria’s External Reserves Dip by $506m in August
On the back of renewed move to defend the naira, Nigeria’s gross external reserves declined by about $506 million over sustained outflows spanning 16 days in the month of August. 2024, data from the Central Bank showed.
The outflow from the nation’s gross external balance was more than government domestic US dollar bond sales to retail investors.
The market awaits the release of the Debt Management Office (DMO) $500 million domestic US dollar bonds which ended last week. Total balance in the external reserves climbed to $36.872 billion early in August.
In the coming days, it is more likely that the Central Bank of Nigeria (CBN) would conduct retail Dutch Auction System where it is expected to sell huge US dollars to authorised dealer banks, analysts said.
The CBN received more than $1 billion FX bids from authorised at the last FX auction that happened at the same time when external reserves was at the peak.
“We expect currency pressures to persist due to limited FX supply, stemming from minimal CBN intervention and weak FPI participation”, analysts at Cordros Capital Limited said.
Analysts said that successful completion of the domestic $500 million US Dollar Bond scheduled to close on Friday could bolster the CBN’s efforts in stabilizing the naira in the short term.
Last week, the monetary authority conducted two open market operations (OMO bills) auctions. The auction was met with significant investors’ interest seeking to park fund in short term investment options.
The CBN is selling OMO bills to banks and foreign portfolios investors only. In 2019, the CBN exclude non-bank locals (individuals and corporates) from participation in its Open Market Operations (OMO) at both the primary and secondary market. #FX Auction: Nigeria’s External Reserves Dip by $506m in August
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