CBN Measures Curb External Reserves Depletion-FBN Capital | Independent Newspapers Limited
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CBN Measures Curb External Reserves Depletion-FBN Capital

Posted: Nov 11, 2015 at 7:57 am   /   by   /   comments (0)

Nigeria’s rate of external reserves depletion decreased significantly in the month of October due to Central Bank of Nigeria’s (CBN) measures, analysts at FBN Capital have said. In a note made available to the New Telegraph, the analysts also noted that the slowdown in the country’s Gross Domestic Product (GDP) growth contributed to the reduced rate of reserves depletion.

According to the analysts, “Data from the CBN show that official reserves decreased by just US$150million in October to US$30.2billion on a 30-day moving average basis. This compares with a loss of US$980million the previous month, which we attribute to the exit of offshore tracker funds following the delisting of Nigeria by JP Morgan.

Although the original country weightings in the indices were reduced to zero at the end of last month, it would appear that most investors departed soon after the announcement by JP Morgan on 08 September. “The much reduced decline also reflects the CBN’s many administrative measures and market ploys.

Import demand has eased as a result of the slowdown in GDP growth but also due to of the CBN’s policies. We assume that the plugging of leakages has been a contributory factor. The balance in the excess crude account, which forms part of reserves, stands at US$2.3billion.

This could be exhausted now that there are suggestions of a large payment of fuel subsidy dues, the first since July.” Also commenting on the country’s external reserves level in a recent note, analysts at the Bismarck Rewaneled Financial Derivatives Company Limited (FDC), noted that the current level of reserves can cover about five month imports. They however predicted that the reserves will deplete further in November.