The nation’s external reserves, which have risen steadily since last year due to reasonably high oil prices and stability in the foreign exchange market, rose higher to $47bn on February 21, 2013.

Data obtained from the Central Bank of Nigeria’s website on Friday showed that the reserves recorded $2.68bn appreciation in seven weeks, from $44.34bn recorded from the beginning of the year till date.

Analysts at FSDH Merchant Bank Limited, in a report made available to our correspondent, said the collaboration between the Federal Government and the CBN to improve the external reserves position had continued to yield positive results.

The report said, “Also, the favourable oil prices at the international market, improved domestic output, fiscal prudence, improved ratings from agencies and the inclusion of FGN Bonds in the JP Morgan Emerging Market Government Bond Index have all contributed to the improvement in the external reserves position of the country.

“The current external reserve can support stable exchange rate in Nigeria. The current level of external reserve is higher than both the International Monetary Fund and FSDH Research projections. The reserve is sufficient to cover over 11 months of imports of goods and services, higher than the threshold of three months.”

The National Bureau of Statistics last Monday said the country’s external reserves would experience less pressure this year due to a reduction for the demand for foreign exchange to settle high import bills.

The bureau said in a report released in Abuja that the projected increase in the value of total merchandise trade was expected to generate higher external reserves through exports.

This, it hoped, would lead to a higher increase in the supply of foreign exchange demand.

The Governor, CBN, Mr. Lamido Sanusi, had last month said the country’s foreign reserves were driven mainly by proceeds from crude oil, gas exports, and crude oil-related taxes as well as reduced funding of the Wholesale Dutch Auction System on account of the huge inflow of foreign portfolio investments.

He said the country’s foreign reserves could finance about nine months of imports.

The NBS report stated, “The recent declines in imports are expected to carry on till the third quarter of 2013. Beyond this point, the growth rate in imports is expected to yield positive year-on-year changes.

“By the fourth quarter of 2013, growth in the value of total merchandise trade will be driven by both higher imports (relative to fourth quarter 2012) as well as oil and non-oil exports.”

The Federal Government had failed to meet its target of raising the external reserves to $50bn by the end of 2012.

The country’s reserves had closed the year at $44.26bn on December 24, 2012.

Source: Punch (By Ademola Alawiye)