Foreign exchange reserves have risen by 5.71 per cent month-on-month to $38.51bn on August 28, 2012, from $36.43bn recorded a month earlier.

The latest figures released by the Central Bank of Nigeria on Wednesday showed that forex reserves rose to a two-year high of $38.51bn. The reserves have not been as high as this since August 10, 2010 when they stood at $38.59bn.Forex reserves had fallen by 1.4 per cent month-on-month to $36.40bn on July 25, from $36.93bn recorded a month earlier.

The $53m decline was attributed to falling oil prices and strong dollar demand.The reserves had plunged in the month of June, dropping by $1bn to $36.768bn on June 28, from $37.768bn they stood on June 6, 2012.

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

The CBN had reportedly said that the nation’s external reserves had continued to grow since August 1, 2012. Consequently, the Minister of Finance and coordinating minister for the economy, Dr Ngozi Okonjo-Iweala, stressed the need for the country to shore up its external reserves.

At a meeting with the Organised Private Sector in Lagos recently, Okonjo-Iweala said that there was the need to build up the reserves to $50bn before December.

She said that this would help the country to stand on its feet in the event of any global economic recession. The CBN sold a total of $10.18bn at the Wholesale Dutch Auction System in the first half of this year.

The CBN had sold and offered a total value of $14.85bn at the WDAS in the first quarter of last year. Forex sales were less than forex offered by $285m by half year 2012. Half year WDAS forex supply for 2011 was $14.85bn, as against $10.45bn in 2012, representing a decrease of 29.70 per cent. On the first half of the year, the Executive Secretary and Chief Executive Officer, Financial Market Dealers Association, Mr. Wale Abe, at a round-table meeting in Lagos, had said, “On the average the gap between rates at the CBN and the parallel market widen with about N6 during the period. Generally, the naira appreciated more against the dollar in March and April, but depreciated more between January and February and between May and June at the official market.”

The CBN sold a total of $2.4bn in June, higher than the $1.62bn and $1.02bn in May and April thereby preventing a free fall of the naira. The implication of increased forex sales by the CBN was the 2.4 per cent decline in the external reserves to $36.8bn in June from $37.7bn in May.”

Source: Punch/Ademola Alawiye