Nigeria’s external reserves slipped to $44.519 billion as at December 9, 2013.
The current value of the forex reserves represents a decline by $869 million this quarter, compared with the $45.388 billion it was as at October 2.
Data compiled from the Central Bank of Nigeria (CBN) also showed the current position of the reserves is its lowest since this year.
The federal government revenues have continued to face significant pressure due to the decline in oil production as a result of the combined effects of oil theft and pipeline shutdown due to the burgeoning illegal trade.
This had led to the decline of the Excess Crude Account (ECA) to only $3.18 billion. The estimated amount of stolen oil was said to be at about 80,000 barrels per day (bpd).
Nevertheless, crude oil prices dropped under $97 per barrel last Friday. The West Texas Intermediate crude oil dropped $1.01 Friday to $96.49 per barrel. The bonny light oil which is Nigeria’s crude oil grade stood at $113.4 bpd as at December 9th.
However, a report by Financial Derivatives Company Limited (FDC) stated that the increased auction spending and decline in oil receipts also contributed to the depletion in the external reserves level.
“The increased auction spending and the decline in oil receipts contributed to the depletion in the external reserves level. In the past month, the naira strengthened slightly by 0.05 per cent and 0.32 per cent at the official and interbank markets respectively.
“The seasonal appreciation of the naira against the dollar at the end of every year is overshadowed by increased speculation of a possible depreciation of the naira. The CBN increased its forex sale at the bi-weekly auction to meet demand pressures from importers and corporate,” the FDC report added.
In a separate report, the BGL Securities declared the country was experiencing its worst oil production disruptions in four years with output falling to pre-amnesty programme levels.
“The disruption in oil production explains the reason why the increasing global crude oil price to five-month high of $111 per barrel has not had the expected impact on government revenue, its savings and accretion to the foreign reserves,” it added.
Standard Chartered Bank’s London-based Head of Macro-Economics and Regional Head of Research for Africa, Razia Khan argued that with domestic politics expected to dominate 2014, the country was unlikely to make much progress in tackling oil theft.
Source: Thisday (by Obinna Chima)
