Don't Miss


Home   >   Business   >   Industries   >   Economy   >   External reserves fall by 19.5% to $35.8bn

External reserves fall by 19.5% to $35.8bn

By on December 12, 2014

The nation’s external reserves fell to $35.8bn on December 9, down 19.5 per cent from $44.5bn recorded same date last year, figures on the Central Bank of Nigeria’s website on Wednesday showed.

The reserves have been dropping very fast in the last few months as the CBN stepped up its defence of the naira currency from the foreign exchange reserves.

The reserves, which stood at $37.7bn a month ago, had fallen by $2bn within one month: it tumbled from $39.1bn on October 21 to $37.1bn on November 21.

The central bank had said it would continue to defend the naira, which has fallen by 12.1 per cent against the dollar this year.

The CBN has been selling huge amount of dollars from the reserves to support the falling naira.

On November 25, however, the central bank devalued the local currency in a bid to reduce pressure on the national currency.

The Governor, CBN, Mr. Godwin Emefiele, last Friday, said it was forced to devalue the national currency in the face of the depleting reserves.

Emefiele said, “The CBN has spent a substantial amount of its reserves in shoring up the naira and in contrast, inflow of forex into the banks or the country has been less than anticipated in view of dwindling oil prices.

“The CBN took the decision that it would be sub-optimal to continue to heavily deplete the country’s reserves in defending the naira. This decision was appropriate because neither the central bank nor the federal government is in control of the major factors causing the depreciation of the nation’s currency.”

Arguing further, he said, “In fact the Russian central bank has abandoned its defense of the currency and allowed the depreciation of the currency, but only after it was said to have spent over $90 billion in defending the currency over a couple of months.”

Meanwhile, the Ministry of Finance on Monday said the Federal Government might lower its economic-growth forecast for 2015 as tumbling oil prices erode government revenue.

A media reports quoted a spokesman for the finance ministry, Mr. Paul Nwabikwu, as saying that the government might lower the 6.35 per cent projected economic growth for next year by one per centage point.

Global oil prices have plunged more than a third since June, roiling the nation’s markets and eroding the foreign reserves.

Analysts have said that the revenue slump may force the government to curb spending in 2015.

 

[Punch]