By Emele Onu, 09.06.2010

Nigeria’s external reserves dropped by $1 billion to $36.010 billion yesterday as against $37 billion as at the end of September.

 

Analysts attributed the depletion, which occurred just about a week to the pressure on the Central Bank of Nigeria (CBN) to finance importation.

 

Nigeria’s foreign reserves rose to about $67 billion in mid-2008, reflecting the high demand and pricing of the country’s crude oil at that time at the international market. But the reserves commenced a free fall in the third quota of that year, owing to the meltdown. Crude oil prices peaked in 2008 when it hit $147 per barrel, but hovered between $38 dollars and $42 a barrel before the end of 2008.

 

The Nigerian crude oil has been trading at about $74 per barrel at the international market, which indicate improved climate for the country’s foreign reserves.

 

However, owing to the uncertainties in the fiscal year, with many economies just beginning to show signs of recuperation from the meltdown, the CBN is cautious in the management and utilisation of the reserves.

 

At the old position of the reserves at $37 billion, the CBN Governor, Sanusi Lamido Sanusi, said the apex bank was comfortable with the position, pointing out that it could still finance 17 months of import.

 

At the bi-weekly wholesale dutch auction system (WDAS) last week, the regulator sold a total of $800million, in an attempt to ease pressure on the local currency that had depreciated consistently across the three market segments the previous week.

 

The CBN sold $400 million at the first in the bi-weekly auction last Monday and $394.80 at the Wednesday auction. But the sales were not sufficient to meet foreign exchange demand that stood at $942.36million during the week.

However, the monetary authority succeeded in reducing pressure on the local currency, which provided the leeway for the naira appreciation noticed last week.

 

At the WDAS last Wednesday, the naira gained 23 kobo to trade N149.06 for one dollar, as against N149.29/ $1 the previous Monday.

 

At the inter-bank market, it appreciated by 43kobo to close the week at N150.85/$1 while at the parallel market it was N153 to the greenback compared to N154/$1 that was exchanged early last Monday.

 

The CBN however, reduced its funding at the WDAS yesterday as it sold $250 million against a market demand of $303 million. That affected the naira as it depreciated by 12 kobo to N149.18 for one dollar against N149.6/$1 previous.

 

Source: Thisday