Foreign exchange reserves have fallen by 1.4 per cent month-on-month to $36.40bn on July 25, from $36.93bn recorded a month earlier.

The slight drop, representing $53m decline, according to analysts, is attributable to the falling oil prices and strong dollar demand.

Forex reserves had plunged in the month of June, dropping by $1bn to $36.768bn on June 28, from $37.768bn it attained on June 6, 2012.

Figures released by the Central Bank of Nigeria showed that the reserves fell by $1bn in 22 days.

Forex reserves had risen to their highest figure of $37.02bn in 21 months on May 14, from $36.66bn grossed at the end of April.

However, the reserves have continued to decline following continuous drop in oil price.

Meanwhile, the naira fell against the United States dollar on the inter-bank market on Monday on strong dollar demand, erasing gains made after the CBN took measures to strengthen the naira currency.

The naira closed at N160.80 to the dollar on the inter-bank market, weaker than the N160.35 it closed at on Friday.

The beleaguered naira received a breather last Wednesday, a day after the CBN took measures to stabilise the weakening local currency, closing at N160.02.

The CBN left its benchmark interest rate on hold at 12 per cent last Tuesday, as expected, but took surprise measures to tighten liquidity.

The CBN raised cash reserve requirement for lenders in Africa’s second biggest economy to 12 per cent from eight per cent and reduced net open foreign exchange positions to one per cent from three per cent to support the naira.

Traders said strong demand for the greenback coming from importers, who were taking advantage of the initial appreciation in the value of the local currency to take positions in the market was responsible for the naira loss.

Reuters quoted a dealer as saying, “The CBN measure was short-lived because when the naira appreciated initially, a number of importers rushed to buy the dollar to take advantage of the lower price and this put more pressure on the available dollars in the market.

“We saw some dollar flows from oil companies today, but not enough to support the level of demand in the market.”

Traders said unit of Royal Dutch Shell and Agip sold over $100m to some lenders on Monday, but demand in the market clear the available dollar.

On the bi-weekly foreign exchange auction, the CBN sold $200m at N155.84 to the dollar, compared with $217m at N155.84 to the dollar last Wednesday.

Source: Punch