External Reserves Drop To $46bn

Barely three weeks after climbing to the $47bn mark, the nation’s external reserves have dropped to the $46bn threshold again, according to the latest data on the Central Bank of Nigeria’s website.

The foreign reserves had dropped by $1.8bn within the space of three months, from the peak of $48.85bn on May 2 to $46.98bn on August 5.

The CBN’s latest data showed that the reserves dropped to $46.97bn on August 21, after rising to the $47bn mark since August 7. The Federal Government had targeted $50bn reserves by the end of 2012.

The reserves, however, closed the year at $44.26bn on December 24, 2012, finishing $6bn below the government’s target.

The performance of the reserves was driven mainly by proceeds from the crude oil, gas exports and crude oil-related taxes as well as reduced funding of the Wholesale Dutch Auction System on the account of huge inflow of foreign portfolio investments.

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, said in May that the outlook for the country’s foreign reserves this year was mixed.

Sanusi told that the foreign-currency reserves would probably keep expanding, while facing risks from lower-than-projected oil output and falling prices.

He said, “Quantitative easing by central banks in the United States, United Kingdom and Japan all point to a likelihood of strong capital flows to emerging and frontier markets that may benefit Nigeria.”

According to the CBN boss, the country relies on crude exports for about 80 per cent of government’s revenue and more than 90 per cent of foreign income.

“We always said that the budget based on projections of about 2.5 million barrels per day was founded on overly optimistic and unrealistic assumptions,” Sanusi said.