Nigeria’s external reserves hit a 29-month high on September 10 and closed at $41.167bn after recording $39.85bn on September 7.

Data obtained from the Central Bank of Nigeria’s website on Wednesday showed that the foreign exchange reserves, which had been on the rise for over a month, increased by 12.74 per cent when compared to what was recorded on August 10.

Nigeria’s forex reserves had been largely driven by strong oil prices and higher production, experts said. The price of Bonny Light, the country’s sweet crude had remained above $115 per barrel at the international market, a development which had favoured the increase in reserves.

On August 10, the foreign reserves stood at $36.51bn and were $33.78bn on September 9, 2011. With respect to the current figure, the reserves had not been this high since April 16, 2010, when they recorded $41.51bn.

Economists, who spoke on the subject in separate interviews with our correspondent, noted that it was a welcome development for the nation’s local currency. They, however, maintained that it was not yet time to celebrate the feat.

“This will make people to have more confidence in the naira and it may make it appreciate,” the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismark Rewane said.

He added, “The reserves increase is making our economy more competitive. It gives the CBN more flexibility and helps it manage the currency better. But let’s not be carried away, its good news but we really have to remain focused.”

The Chief Consultant, B. Adedipe Associates, Dr. Biodun Adedipe noted that the development was driven by the stability and increased revenue as a result of the price of crude oil globally.

He noted that there was likelihood that the country would make more revenue from crude oil, adding that the increase of over $40bn in reserves before the end of September beat most predictions by economists.

He said, “This is good for the country and it is going to impact positively on the naira. However, there is still the likelihood that we may continue experiencing this increase should there be stability as we are experiencing.”

Also speaking on the subject, a Professor of Economics from the University of Lagos, Prof. Wale Adewumi ,told our correspondent that Nigeria must diversify in order to ensure sustenance.

He noted that the rise in foreign exchange reserves might not continue if there was a fall in oil prices and called on the government to take steps to diversify the country’s revenue sources.

He said, “The reserves are on the rise, this is good news. But how long must we depend solely on just one source of revenue? I think the government should not relax but should start making frantic efforts to diversify our revenue sources.

“The earlier we get this right, the better for all of us as a people.

We should not just depend on oil. It is a good thing to have the reserves on this rise like this. It makes other nations believe in our economy and has a way of attracting investors to come invest here.”

Source: Punch/Okechukwu Nnodim