The Central Bank of Nigeria (CBN) on Tuesday released data which showed that the nation’s foreign exchange reserves climbed to $38.49bn, a 3.8 per cent increase on its value month ago, when they stood at $37.09bn, owing to a more stable naira.
The naira has remained stable against the dollar for the past two weeks — around N161.5-N162.25, supported by slowing demand for the dollars and increased dollar flows from independent sources other than the central bank.
The nation’s forex reserves were, however, down 18 per cent year-on-year, the data showed. The reserves stood at $46.93bn on July 18, 2013.
In a bid to save the naira from further depreciation, the CBN had depleted the nation’s external reserves by $17.58bn in the first half of this year as it battled to maintain a stable exchange rate.
The central bank sold a cumulative sum of $17.58bn to 50 currency dealers at the Retail Dutch Auction System between January and June this year.
The $17.58bn sold in the first half of the year is about 65 per cent higher than the $10.68bn sold in the similar period of last year.
Financial and economic analysts said the 65 per cent increase in demand for foreign exchange during the first half of the year was too enormous; pointing out that the unfortunate situation was responsible for the huge depletion of the nation’s foreign reserves.
The naira had eased by 0.21 per cent against the dollar on Monday, after some importers took advantage of its recent appreciation against the greenback to lock in rates.
Reuters reported that the currency eased after last week’s gains, closing at N162.25 to the dollar on Monday.
The naira traded around N161.45-N161.90 to the dollar last week, lifted by dollar flows from oil companies and offshore investors buying local debt.
Volatile oil earnings, falling dollar reserves, delayed upside from the power reforms, among other factors have combined to upset naira’s exchange rate stability.
The naira, which traded N150 band for long after the volatility of 2009 occasioned by the world financial crisis, has struggled to stabilise at N160 region for many months now. – Punch.
