External reserves fall to $47.3bn in July By Blaise Udunze

The Central Bank of Nigeria (CBN) recent provisional data showed that Nigeria’s external reserves fell slightly to $47.296 billion as of July 9, from $47.377 billion on the previous day.

The drop in the nation’s reserves represents a decline of about $1.159 billion in the corresponding period of June. This, the apex bank attributed to continued defense of naira in the face of declining supply of foreign exchange by autonomous sources, just as there was a slowdown in oil revenue.

The latest figure showed that the reserves level had fallen below the $47.88 billion it stood at the end of March 2013, when it was still on the upward swing, touching the $48 billion mark on March 11, when it rose to $48.104 billion.

It thereafter peaked at $48.853 billion on April 30, before beginning a gradual descent. Commenting on the nation’s weakening foreign reserves a fortnight ago, analysts at Lagos-based investment banking group, FBN Capital Limited, blamed the drop on the “several pressure points (that) have developed in the Nigerian economy in recent weeks.”

These, analysts noted in “Good morning Nigeria,” a daily commentary on finance and economic issues, have exposed the Achilles heel in the nation’s credit story, “namely its vulnerability to a sharp and sustained decline in oil revenues.

“The first is the naira exchange rate, which the CBN has defended by stepping up its foreign exchange sales at auction and by direct intervention in the market. The second is the official reserves, which soared by $12 billion in the eight months to end-March but have since stabilised around US$48 billion.”

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