External reserves drops by $2b in four months

Governor of the CBN Sanusi Lamido

Based on the information provided by the Central Bank of Nigeria (CBN), the nation’s external
reserves pool, at the weekend, resumed another downward slide, closing at $46.85 billion on August 29, 2013.
The drop brought cumulative decline since the end of July to $177 million or 0.37 per cent, as the apex bank continued its defence of the nation’s Naira to ensure its stability against other currencies.
The decline in the external reserves brought its cumulative fall in four months from the end of April when it stood at $48.853 billion to $2 billion or 4.09 per cent, as it close last Thursday at $46.853 billion.
Last Thursday’s reserves level, however, represented an increase of $3.02 billion or 6.89 per cent growth over the $43.83 billion recorded at the end of 2012, according to the CBN data.
Commenting on the reserves level at its July 2013 Monetary Policy Committee (MPC) meeting, the CBN Governor, Lamido Sanusi, said the members expressed satisfaction “with the prevailing macroeconomic stability achieved during the period, including the single digit inflation, stable banking system, exchange rate stability, favourable output growth, capital market recovery and growth in external reserves, thus sustaining internal balance and external viability.
“The committee also noted the recent volatility in the foreign exchange market and also recognised that the commitment of the bank to defend the currency in the face of capital flow reversal and significant revenue attrition has stemmed the depreciation of the naira. Consequently, the bank has been able to sustain the objectives of financial and price stability.”
Meanwhile, according to report by Bloomberg at the weekend, Nigeria’s external reserves rose the most in almost two years, following the apex bank’s intervention, selling dollars directly to the market to lift the currency from a year-low.
According to Samir Gadio, a London-based emerging-markets strategist at Standard Bank, “the central bank intervened today to calm the market and signal that it will protect the exchange rate. Additionally, there was also an Open Market Operations auction for the first time in several weeks to mop up excess liquidity.”
The Naira jumped 2.4 per cent to N159.80 per dollar, after the CBN sold $563.5 million last week, compared with $548.4 million in the previous five days.
Analysts blame the nation’s weakening foreign reserves on the “several pressure points (that) have developed in the Nigerian economy in recent weeks.”
These, the analysts agree, have exposed the Achilles heel in the nation’s credit story, “namely its vulnerability to a sharp and sustained decline in oil revenues.

Rebellion, panic engulf PDP as Jonathan meets rebel governors, others - See more at: http://www.vanguardngr.com/2013/09/rebellion-panic-engulf-pdp-as-jonathan-meets-rebel-governors-others/#sthash.8ixEhNxA.dpuf