Nigeria’s foreign reserves dip to $52.7 billion January 2, 2009 | posted by Nigerian Muse (Archives)

 

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Foreign investors seeking safety amid the global credit crunch have withdrawn money from the country, leaving the CBN as “the only source” of foreign exchange, said Fola Fagbule, head of research at Afrinvest, a Lagos-based investment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