Don't Miss


Home   >   Business   >   Industries   >   Economy   >   Nigeria’s Forex reserves hit 4-month low

Nigeria’s Forex reserves hit 4-month low

By on November 13, 2014

Nigeria’s foreign exchange reserves fell to a 4-month low of $37.9 billion as of November 7, down by 3.99 per cent month-on-month after the Central Bank of Nigeria (CBN) sold dollars to banks to prop up the value of the naira.
Data published by the central bank on Tuesday showed the reserves were at $39.55 billion on October 10. In July it stood at $37.89 billion.
The central bank last week said it will continue to defend the local currency, which has fallen six per cent so far this year on concerns about lower oil prices and an exit from the local debt and equity markets by offshore investors.
In a related development, the naira weakened slightly on the interbank market yesterday due to strong demand for dollars from foreign investors.
The local currency closed at N168.40 to the dollar, compared with N168.20 the previous day, according to Reuters.
Traders said the central bank had intervened in the market to buy naira, providing some support, but not enough to lift the currency.
The traders expected the interventions to continue to provide dollar liquidity.
According to them, two energy firms had sold dollars, but they are not enough to push up the naira. Saipem, a local unit of Eni sold $10 million, while Chevron sold $45.5 million, the traders revealed.
Speaking in Lagos yesterday, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane said: “It is good to have a strong currency, but good to have and need to have are two different things. What the central bank and Nigeria needs now is doing the right thing and doing it at the right time.
“If we have adjusted in March we shouldn’t have been at N160, we should have been at about N135. So if we don’t do it quickly, we would have to do it anyway. I think the central bank at the meeting on the 24th and 25th Monetary Policy Committee is going to have to take a very hard look and make some adjustment you cannot hold on all the way till February, you would have to start the process now. I don’t think we have the luxury of holding it till after the elections.”
He also stressed the need for discipline in order to mitigate the country’s huge infrastructure deficit.

 

[ThisDay]