The country’s external reserves rose to $26.2bn on January 4, 2017, up from $25.8bn on December 30, 2016, the latest data from the Central Bank of Nigeria (CBN) showed on Thursday.
The data also showed that the foreign exchange reserves ended last year with $25.84bn balance on December 30, 2016.
The foreign exchange reserves had risen to over four-month high of $25.7bn on December 28, up from $25.4bn on December 23.
The foreign exchange reserves have been rising in recent weeks following the gradual increase in oil price and production output.
In less than one week, the reserves rose by almost $300m from $25.084bn on December 16, 2016 to $25.361 on December 22.
However, currency and economic experts are not sure if the tiny upticks in the external reserves’ level are sustainable amid a falling naira and acute shortage of dollar in the foreign exchange markets and the economy.
Despite the staggering crash in the value of the naira against the United States dollar and other major foreign currencies last year, the CBN spent $4bn from the nation’s external reserves to defend the local currency in 12 months.
On December 22, 2015, the reserves stood $29.341bn. On December 22, 2016, the foreign exchange reserves stood at $25.361bn. This means that the external reserves were depleted by $4bn in 12 months.
The drop was estimated at 14 per cent. On December 31, 2015, the last day of the year, the external reserves stood at $29.069bn, compared to $25.84bn recorded on December 30, 2016.
The controversial defence of the naira by the CBN has come under severe criticism by economists, who believe that the forces of demand and supply should be allowed to determine the exchange rate of the naira, at least to a considerable level.
A senior associate in investment banking at Afrinvest, a research and investment firm, Ayodeji Ebo, said the gradual increase might only be sustainable if the oil price maintained its current level and there was a continuous ramp up in oil production.
Earlier, the reserves had fallen from $26bn on August 4, 2016 to $25.97bn on August 5 as the central bank stepped up dollar sales to boost liquidity at the interbank market and support the ailing naira.
The country’s fast-depleting reserves had recorded $23.89bn low on October 19.
At the end of November 2016, the reserves stood at $24.77bn, up from $23.95bn on October 31. The reserves have dropped by 15.9 per cent between 2015 and 2016.
An analyst at EY, Bisi Sanda, said there were indications that oil price and output would rise further this year.
He, however, said that the Federal Government needed to use this to the country’s advantage.
The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, said aside from the increases in oil price and output, the upticks in the external reserves could also be linked to the slowdown in the allocation of forex to the market by the CBN.
