Nigeria’s foreign reserves dip to $52.7 billion

2 Comments » January 2nd, 2009 posted by // Categories: Nigeriawatch



THIS DAY

Foreign Reserves Fall by $6bn in One Month

01.03.2009

As the global credit crisis takes its toll on the world economy and further depresses oil prices, Nigeria’s foreign currency reserves fell by $6 billion or 8.2 per cent in December last year to $52.7 billion.

Reserves in the month to December 29 dropped from $57.4 billion in November, the Central Bank of Nigeria said yesterday in its monthly report.

Record oil prices had helped Nigeria to build the largest currency reserves in sub-Saharan Africa, which peacked at $63 billion in September 2008.

But oil prices have plummeted since September 2008 after attaining a record high of $147 in July. Oil was trading below $42 in New York yesterday.

Foreign investors seeking safety amid the global credit crunch have withdrawn money from the country, leaving the CBN as “the only source” of foreign exchange, said Fola Fagbule, head of research at Afrinvest, a Lagos-based investment bank.

The naira has depreciated by more than 14 per cent in the past month after the CBN cut the amount of dollars sold to local banks at its twice weekly foreign currency auction.

On December 16, the CBN Governor, Chukwuma Soludo, said the currency was allowed to weaken to protect dwindling foreign reserves.

The Organisation of Oil Exporting Countries (OPEC) which produces about 40 per cent of the world’s oil, cut production by 2.2 million barrels a day on December 17 in a bid to arrest the decline in crude prices.

Nigeria has the continent’s biggest hydrocarbon reserves, with more than 30 billion barrels of crude oil and 187 trillion cubic feet of gas.

The country is the fifth-largest source of United States oil imports and the eight largest producer in the world.

http://cenbank.org/Intops/Reserve.asp

The Movement in Reserves

The evolution of the foreign exchange market in Nigeria has been influenced by a number of factors such as the changing pattern of international trade, institutional changes in the economy and structural shifts in production. Prior to the establishment of the Central Bank of Nigeria (CBN) and the enactment of the Exchange Control Act of 1962, foreign

Date Gross Liquid Blocked %
12/29/2008 52,744,198,226 51,195,596,177 1,548,602,049 2.94%
12/24/2008 53,337,809,593 51,791,256,342 1,546,553,251 2.90%
12/23/2008 53,404,633,090 51,858,492,721 1,546,140,370 2.90%
12/22/2008 54,211,310,839 52,664,649,842 1,546,660,997 2.86%
12/19/2008 54,566,644,435 53,019,481,662 1,547,162,774 2.84%
12/18/2008 55,059,481,324 53,506,880,309 1,552,601,015 2.82%
12/17/2008 54,969,453,448 53,428,568,476 1,540,884,973 2.81%
12/16/2008 56,018,468,321 54,473,221,599 1,545,246,722 2.76%
12/15/2008 56,869,819,276 55,328,767,028 1,541,052,247 2.71%
12/12/2008 57,714,306,782 56,180,770,430 1,533,536,352 2.66%
12/11/2008 57,791,642,811 56,258,831,899 1,532,810,912 2.66%
12/10/2008 58,015,327,477 56,487,799,878 1,527,527,600 2.64%
12/5/2008 58,109,121,177 56,564,592,239 1,544,528,938 2.66%
12/4/2008 58,244,898,235 56,701,796,385 1,543,101,850 2.65%
12/3/2008 58,371,959,790 56,827,426,291 1,544,533,499 2.65%
12/2/2008 57,310,997,290 55,761,047,809 1,549,949,481 2.71%
11/28/2008 57,480,502,442 55,897,955,575 1,582,546,867 2.76%
11/27/2008 57,254,973,699 55,671,636,741 1,583,336,958 2.77%
11/26/2008 57,264,462,781 55,679,794,246 1,584,668,535 2.77%
11/25/2008 57,239,336,543 55,655,533,043 1,583,803,500 2.77%
11/24/2008 57,763,534,841 56,183,628,855 1,579,905,986 2.74%
11/21/2008 57,673,809,121 56,096,321,377 1,577,487,744 2.74%
11/20/2008 58,100,903,446 56,524,474,785 1,576,428,662 2.72%
11/19/2008 58,906,457,494 57,326,616,064 1,579,841,430 2.69%
11/18/2008 59,303,460,101 57,714,765,873 1,588,694,228 2.68%
11/17/2008 59,508,903,982 57,920,263,643 1,588,640,338 2.67%
11/14/2008 59,622,456,251 58,025,732,170 1,596,724,081 2.68%
11/13/2008 59,647,962,643 58,054,637,544 1,593,325,099 2.68%
11/12/2008 60,200,839,145 58,610,155,287 1,590,683,858 2.65%
11/11/2008 59,556,837,424 57,953,182,204 1,603,655,220 2.70%
11/10/2008 59,691,245,509 58,083,448,428 1,607,797,082 2.70%
11/7/2008 59,664,946,668 58,056,782,709 1,608,163,959 2.70%
11/6/2008 59,696,074,287 58,087,910,328 1,608,163,959 2.70%
11/5/2008 59,895,408,331 58,291,315,480 1,604,092,852 2.68%
11/4/2008 58,330,969,041 56,730,543,892 1,600,425,149 2.75%
11/3/2008 58,526,227,551 56,919,832,381 1,606,395,170 2.75%
10/31/2008 58,534,147,073 56,926,219,231 1,607,927,842 2.75%
10/30/2008 58,383,015,576 56,767,043,199 1,615,972,377 2.77%
10/29/2008 58,426,401,372 56,816,913,693 1,609,487,679 2.76%
10/28/2008 58,690,263,342 57,086,897,572 1,603,365,770 2.74%
10/27/2008 59,146,179,502 57,545,849,112 1,600,330,390 2.71%
10/24/2008 59,391,086,640 57,784,906,514 1,606,180,125 2.71%
10/23/2008 59,873,034,963 58,856,731,983 1,016,302,980 1.70%
10/22/2008 60,402,520,174 58,583,158,910 1,819,361,264 3.02%
10/21/2008 60,713,228,352 59,084,319,680 1,628,908,672 2.69%
10/20/2008 61,351,501,853 59,712,506,846 1,638,995,007 2.68%
10/17/2008 61,482,829,802 59,835,830,445 1,646,999,358 2.68%
10/16/2008 62,060,109,201 60,406,245,557 1,653,863,644 2.67%
10/15/2008 62,548,564,784 60,941,278,486 1,607,286,298 2.57%
10/14/2008 62,704,597,595 61,034,944,465 1,669,653,129 2.67%
10/13/2008 63,261,856,468 61,600,204,636 1,661,651,832 2.63%
10/10/2008 63,212,662,187 61,553,476,423 1,659,185,764 2.63%
10/9/2008 63,575,663,197 61,913,700,006 1,661,963,191 2.62%
10/8/2008 62,108,025,236 60,243,220,748 1,864,804,488 3.01%
10/7/2008 62,263,984,993 60,601,843,128 1,662,141,864 2.67%
10/6/2008 61,073,984,424 59,206,090,513 1,867,893,911 3.06%
10/3/2008 61,435,393,074 59,762,330,311 1,673,062,763 2.73%
10/2/2008 61,481,865,285 59,803,191,342 1,678,673,943 2.74%
10/1/2008 61,988,033,127 60,287,714,620 1,700,318,507 2.75%

Nigeria’s foreign reserves dip to $52.7 billion

2/1/2009

Nigeria’s foreign reserves ended 2008 at $52.7 billion, according to the Central Bank of Nigeria (CBN).

A surge in demand for foreign exchange at the CBN’s Wholesale Dutch Dutch -Auction System (WDAS) has resulted in a steady depletion of the reserves since mid October.

Banks bought over $10 billion from the WDAS between October and December – a record in the history of forex trading in the country.

Figures obtained from the CBN website showed that reserves which stood at $53.37 billion on December 24 had gone down by almost a billion dollars five days after (on December 29) to $52.37 billion.

Incidentally, the CBN last supplied dollar to the foreign exchange market on December 19. But the apex bank had explained in the past that fluctuations in the reserves’ level could be attributable to changes in the value of dollar, which is Nigeria’s major reserve currency among other factors.

The reserves started the month of December at $57.3 billion.

Figures earlier obtained from the CBN had shown that the reserves had risen to over $63 billion up to October 10, before the recent depletion.

Analysts had explained that the drop might not be unconnected with the current global financial crisis, which has eroded most financial assets across the globe.

The spokesman of the CBN, Mr. Festus Odoko, had explained that the up-and-down movement in the level of reserves was a normal economic trend, depending on the level of outflow or inflow of foreign exchange to the country’s coffers.

Investigations showed that the Nigerian banks now depend almost mainly on the CBN window for their foreign exchange needs, as their foreign counterparts had cut credit lines usually extended to them which provided them additional sources of dollar resources.

Besides, most of them had to source dollar to pay back outstanding credits to their correspondent banks, which recalled their credits in the wake of the international credit crunch.

Foreign reserves, which are liquid assets held by a central bank or government of a country, for use in intervening in the foreign exchange market, include gold or convertible foreign currencies like the US dollars for countries other than the United States, and Dutch Mark for countries other than Germany and government securities issued in the above currencies.

The country’s reserve grew by 24.39 per cent between January 2007 and 2008. The figure had stood at $43.59-billion on January 31, 2007 but rose to $54.22-billion on January 31 2008.

There have been concerns about the safety of the Nigeria reserves in the face of the global financial crisis that has led to demise of several financial institutions, especially on Wall Street.

But the Governor of the CBN, Professor Chukwuma Soludo, has on various occasions assured Nigeria of the safety of the country’s reserves.

Soludo said recently that the bank was monitoring closely developments in the global financial system especially they affect the custodians to Nigerian reserves.

JP Morgan, a major custodian of Nigeria’s reserves, is one of the few global banks with the minimal impact of the global situation on their operations.

http://cenbank.org/Intops/Reserve.asp

The Movement in Reserves

The evolution of the foreign exchange market in Nigeria has been influenced by a number of factors such as the changing pattern of international trade, institutional changes in the economy and structural shifts in production. Prior to the establishment of the Central Bank of Nigeria (CBN) and the enactment of the Exchange Control Act of 1962, foreign

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2 Responses to “Nigeria’s foreign reserves dip to $52.7 billion”

  1. […] Yar’Adua inherited an external reserve of $45 billion, which grew to $63 billion in September, 2008. Due to the twin blows of reduced income from MEND terror and tanked global oil […]

  2. […] Yar’Adua inherited an external reserve of $45 billion, which grew to $63 billion in September, 2008. Due to the twin blows of reduced income from MEND terror and tanked global oil […]

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