Nigeria’s foreign exchange (forex) reserve has risen by $2 billion in the last 3 months to $31.3 billion as at September 2, 2015.Observations show that the bearish move in the crude oil market appears to be persistent, causing a spiral effect on external reserves increase and the ability of the apex bank to defend its exchange rate peg.

Although the oil price for Nigeria’s brand (brent and bonny light) is marginally above $50, the market sentiment is already pricing in this risk “as the local unit is currently trading at N222.30/$ at the nine-month onshore forward market, while parallel market spot rate has fluctuated between N215.00 and N240/$ in the past one month.”