Foreign Reserves Shed $309m In Two Weeks | Independent Newspapers Limited
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Foreign Reserves Shed $309m In Two Weeks

Posted: Sep 8, 2015 at 7:45 pm   /   by   /   comments (0)

Closes August At $31.322b

By Sola Alabadan,


Nigeria’s foreign reserves fell by $309.358 million or 0.97 percent from $31.631 billion on August 14 where it peaked during the month to $31.322 billion on August 31, data from the Central Bank of Nigeria (CBN), showed on Wednesday.

The data indicated that from $31.631 billion on August 14, the figure fell to $31.602 billion on August 17, $31,585 billion on August 18, $31,474 billion on August 24 and $31,398 billion on August 28.

The decline from $31.63 billion on August 14 reflects consistent dollar sales by the central bank to bureau de change operators to narrow the margin between the naira currency’s official and black market rates.

The apex bank disclosed that the reserves declined further to $31.302 billion on September 1.

The forex reserves of Africa’s top crude exporter stood at $39.61 billion at the end of August 2014.

As at January 5 this year, the CBN had pegged the nation’s foreign exchange reserves at $34.49 billion.

The Federal Government had through fiscal policies made attempts since 2013 to shore up the foreign reserves to $50 billion.

The CBN had in 2014 relied heavily on external reserves to support the Naira which came under pressure following falling international prices of crude oil.

Rather than continue to defend the Naira in order to maintain exchange rate stability, Kate Isabota, an analyst at Dunn Loren Merrifield, had advised the CBN to further devalue the currency in the current year to ease the rapid depletion of the nation’s external reserves.

Due to the fact that the nation’s economy is sensitive to oil price shocks, to the extent that any development in the domestic and international oil markets has a ripple effect on most macro-economic indicators, the naira has come under immense pressure which has been largely sustained since August 2014 with the apex bank implementing strategies in a bid to maintain exchange rate stability.

Some of the various policy measures introduced by the CBN in recent months to ease the significant pressure on the naira were the movement of the midpoint of the official window of the foreign exchange market to N168/$1 in November 2014 and the closure of the RDAS/WDAS foreign exchange window in February 2015.

However, she pointed out that the renewed pressure on the naira in recent weeks has exacerbated the depletion of the nation’s external reserves as the CBN remains keen on defending the naira, as the external reserves steadily declined in the last one month to current level of $29.00 billion – the lowest in over 54 months considered.

More recently, the CBN issued a circular which excluded importers of 41 selected goods and services from accessing foreign exchange at the Nigerian foreign exchange markets.

They include: rice, cement, margarine, palm kernel/ palm oil products/ vegetable oils, meat and processed meat products, poultry – chicken, eggs, turkey, private airlines/ jets, furniture, toothpicks, textiles, woven fabrics, clothes, plastic and rubber products, soap and cosmetics, tomatoes/ tomatoes paste and euro bond/ foreign currency bond/ share purchases, amongst others.