• Weak Naira falls further to 413/Dollar

Central Bank of Nigeria’s portion of the foreign reserves fell to $19.44 billion as non-oil exports fell by over 43 percent in the second quarter of 2016.
“Provisional data showed that total non-oil export earnings, at US$576.97 million, fell by 43.2 per cent, below the level in the preceding quarter,” CBN said in its second quarter economic report.
“The development, relative to the preceding quarter, was attributed, mainly, to the significant decline in receipts from manufactured and food products as well as minerals export.
“A breakdown by sectors showed that proceeds from the export of agricultural, minerals, industrial, manufactured products, food products and transport sectors stood at US$196.87 million, US$185.51 million, US$84.34 million, US$79.44 million, US$30.68 million and US$0.12 million respectively.
“The percentage shares of agricultural, minerals, industrial, manufactured products, food products and transport sectors in the total non-oil export proceeds were 34.1 per cent, 32.2 per cent, 14.6 per cent, 13.8 per cent, 5.3 per cent and 0.02 per cent, respectively.”
This saw the gross external reserves at the end of the second quarter of 2016 stand at $26.51 billion, showing a decline of 3.0 per cent and 6.5 per cent, compared with the levels in the preceding quarter and the corresponding period of 2015, respectively.
“The development, relative to the preceding quarter, was due to increased sales of foreign exchange at the interbank market and notional changes in the value of third currencies.
“A breakdown of the official external reserves showed that CBN reserves stood at US$19.44 billion (73.3%), Federation reserves, US$2.45 billion (9.3%), and the Federal Government reserves, US$4.61 billion (17.4%)”.
The CBN said “a total of US$4.31 billion was sold by the CBN to authorized dealers during the second quarter of 2016”.
“This reflected an increase of 22.7 per cent above the level in the preceding quarter, but a decline of 41.5 per cent relative to the level in the corresponding period of 2015.
“The development, relative to the preceding quarter, was attributed to the increased intervention by the CBN at the forex market and swap transactions.”
Naira got weaker on Monday as Nigeria awaits the official gross domestic product (GDP) report from the National Bureau of Statistics, NBS, which will declare Nigeria’s recession position.
The NBS is billed to release the official report on August 31, and it is expected to confirm how deeply Nigeria has slid into recession, following a 0.36 percent slip in the first quarter of 2016.
The naira opened at 413 to the dollar at the parallel market while the interbank market rate spiked from its closing 315.25 on Friday to 319.25 on Monday morning.
The British pound and the Euro went for N530 and N455 on Monday at the parallel market.
Lukman Otunuga, FXTM research analyst, said the Nigerian government showed resilience by approving the “three-year budget plan despite concerns remaining elevated over slowing growth which weighed heavily on sentiment.
“The Federal Executive Council, FEC, has approved the medium-term expenditure framework, MTEF, and Fiscal Strategic Paper, FSP, for 2017-2019, which could be seen as a blueprint on how the nation plans to recover in this period of uncertainty,” Otunuga said.
“With low oil prices seriously punishing Nigeria, the federal government may have been forced to adopt a conservative approach in the three-year project.
“The federal government has fixed average prices of oil per barrel at $42.5 for 2017 with 2.2 million barrels of crude created daily. Growth rate was also targeted to three percent in 2017 and 4.26 percent in 2018 as the nation embarked on the journey to diversification.”
Otunuga added that the NBS GDP report might heavily influence investors and render the naira vulnerable.
“While some optimism could be felt from the approval of the three-year budget, investors may heavily focus on the second quarter GDP report, which will be released on the 31st of August and which may offer clarity on how the economy is faring.
“Fears of a recession still linger and a second quarter GDP which fails to meet expectations could dent sentiment further consequently leaving the Naira vulnerable to heavy losses.”

READ ALSO  JAMB says no special centre for 2016 UTME