Nigeria’s foreign exchange reserves came close to $40bn on Friday. 

Specifically, the forex reserves increased by $407m or 1.03 per cent, from $39.351bn recorded on September 4, 2012, to close at $39.758bn on September 6.

Also, between August 6 and September 6, the reserves rose by $3.35bn, a development which analysts described as beneficial to the Nigerian economy.

Driven by rising crude exports, the reserves had risen to $38.62bn by August 29, which was 5.81 per cent up on the previous month.

The Nigerian National Petroleum Corporation had said about 85 per cent of the increase in the reserves was from crude oil, with the country’s crude oil production hitting a record high of 2.7 million barrels per day on August 1.

The foreign exchange reserves stood at $36.5bn on the same date last month and at $37.18bn on August 25 last year, the closest available comparable figure.

Reserves had risen by 5.71 per cent month-on-month to $38.51bn as of August 28, 2012, from $36.43bn recorded a month earlier.

This showed that the reserves rose to a two-year high. They had not been that high since August 10, 2010 when they stood at $38.59bn.

The forex reserves had fallen by 1.4 per cent month-on-month to $36.40bn as at July 25, from $36.93bn recorded a month earlier.

The $53m decline, according to analysts, was as a result of 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 on June 6, 2012.

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

The Central Bank of Nigeria had 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.

Reacting to the increase, the former President, Association of National Accountants of Nigeria, Dr. Samuel Nzekwe, said, “What this means for the economy is that our currency will start getting  some respect when compared to  other currencies world over. It means that Nigeria as a nation now has solid financial backup.

“Creditors will not be able to say no to our requests for imports in terms of credit facilities and so on and so forth, because they know that we have money to pay. That means we have the required purchasing power.

“It is going to give weight and confidence to our currency both internally and externally. The confidence in our naira will be boosted and when you consider all these, you will agree that generally it will have a positive impact on our economy.

Reacting to the development, the President, Lagos Chamber of Commerce and Industry, Mr. Goodie Ibru, said it was a welcome development.

He noted that the steady increase in reserves would boost the country’s financial image in the international community, adding that investors would have confidence coming to invest in Nigeria.

He, however, noted that the government should look for ways to consolidate the gains in external reserves by improving the nation’s infrastructure.

He said, “Our reserves are rising and this is good for Nigeria. Investors will be impressed knowing that we can pride ourselves on robust reserves. However, the government should look at how to develop our decaying infrastructure this time.

“They should not relax. And they should also diversify to agriculture, because once these are efficiently put in place, we can be sure of a more vibrant reserves.”

Source: Punch/Okechukwu Nnodim