External Reserves Hit 6-month High

16 Feb 2012

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Minister of  Finance, Mrs Ngozi Okonjo Iweala

By  Obinna Chima

Nigeria's forex reserves, which have been bullish since this year attained a six-month high of $35.036 billion on February 13.

Data obtained from the Central Bank of Nigeria’s (CBN’s) website showed that the last time was around it current value was on September 12, last year, when it stood at $35.072 billion.

At its current position, THISDAY findings showed that the reserves had gained a total of $2.137 billion this year, compared with the $32.899 billion it was as at December 29, 2011.

Financial market experts had attributed the accretion in the forex reserves to the steady rise in oil prices in the international market since this year as well as the moderate demand for forex at the CBN’s official forex market –the Wholesale Dutch Auction System (WDAS).

Oil prices climbed further yesterday after Iran said it would cut off some crude exports to Europe in retaliation for a planned embargo later this year. Specifically, the benchmark United States crude rose by $1.08 to $101.82 per barrel in New York. Brent crude, which is used to price foreign oil that's imported by refineries, rose by $1.53 to $118.88 per barrel in London.
Regional Head of Research, Africa, Global Research, Standard Chartered Bank, Razia Khan, had informed THISDAY that the steady growth recorded by the reserves to last year's tightening, a lessening of demand at the WDAS auctions due to the partial removal of the subsidy, and the new forex band that was adopted last year by the CBN.

She had explained: “Ultimately, Nigeria will need more fiscal savings (so build-up of the excess crude account once again) and more transparency in the management of its oil earnings.  Outside of these two crucial requirements, there is little that the monetary authorities can do, on their own, to accumulate reserves.”

Meanwhile, the naira strengthened at both the interbank and official market of the forex markets yesterday.
Reuters attributed the development to sale of $425 million by the Nigerian National Petroleum Corporation (NNPC) and two multinational oil companies to banks.

The naira closed at N158.40 to a dollar on the interbank yesterday, its strongest value in almost three months, compared with the N158.60 to a dollar it closed the previous day.

At the WDAS, the local currency gained 10 kobo to close at N156.40 to a dollar yesterday, compared with the N156.50 to a dollar, it closed on Monday. The CBN offered a total of $350 million to the 20 banks that participated in the auction, higher than the $250 million it sold on Monday.

Tags: External Reserves, Featured, Nigeria, Business

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