Nigeria’s external reserves have been projected by analysts in the financial sector, to rise to $30 billion by March 2017.

The reserves which dropped to $23.9 billion on October 19, 2016, increased to $28.9billion as at January 24, 2017, buoyed by the rising oil prices and stability in the Niger Delta region.

Nigeria’s foreign reserves rose to the highest level in May 2013 to $48.9 billion when the prices of crude oil were still $103.03 per barrel.

The Central Bank of Nigeria (CBN) had said that rising oil prices in the global market made the inflow of the reserves increase by 82%, making it rise to the current $28.9 billion.

While analysts in the sector have said that the rise in reserves will help increase investor confidence as well as boost the possibility of Nigeria’s success in the planned $1 billion Eurobond issue by March, they are also concerned about the acceleration in foreign exchange reserves in the country in the past weeks.

“It is not yet clear what is driving it. CBN cash flow data appears to suggest large non-oil related inflows in December. With improved oil output and prices (output looks more hopeful following the success of recent government negotiations with the Niger Delta, while oil prices are benefiting from the recent OPEC agreement), there is no reason why FX reserves should not get to $30 billion. But bear in mind that there is also a considerable backlog of yet-to-be-settled dollar demand. This issue remains unresolved,” Razia Khan, Managing Director and Chief Economist, Africa Global Research, Standard Bank said.

Anita Fatunji