External reserves fall by $1bn

The external reserves have fallen from $45bn to the $44bn mark, according to the latest data from the Central Bank of Nigeria.

Specifically, the reserves data posted on the CBN website on Monday showed that the reserves fell to a 10-month low at $44.9bn on November 8, 2013.

The last time the reserves dropped to $44.9bn was on January 17, 2013. According to the data, the reserves dropped steadily from $45.9bn on September 20 to the $44.9bn on November 8. This means the reserves fell by $1bn within seven weeks.

The external reserves had fallen to a nine-month low at $45.083bn on October 14, about $83m above the $44bn mark.

Analysts had predicted that the reserves would fall to $44bn before the end of October, 2013.

However, the reserves recorded $45.2bn on October 31.

The reserves fell to the $45bn mark on September 20, and had hovered around the $45bn until November 8 when it dropped to the $44bn mark.

Between September 20 and October 9, the foreign reserves fell from $45.9bn to $45.1bn.

According to financial analysts, the CBN’s stance to keep defending the value of the naira from the reserves might further deplete the amount in the reserves.

The Federal Government had targeted $50bn reserves by the end of 2012.

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

Between May 2 and August 5, 2013, the foreign reserves dropped by $1.8bn from the peak of $48.85bn to $46.98bn.

However, the CBN recently dismissed claims that the reserves were experiencing a sharp decline, adding that the current value of $46bn showed that the fundamentals of the economy remained strong.

The CBN Governor, Mr. Lamido Sanusi, said in spite of the uncertainties in the global economy, which had made major economies to cut interest rates in order to provide market liquidity, Nigeria’s external reserves would be invested in a currency mix that would optimise returns for the country.

He also allayed fears about the uncertainties in the Nigerian economy and stressed the reserves could finance about 11 months of importation.

Sanusi had said, “The fundamentals of the Nigerian economy are still very strong and occasionally, there might be an increase or a decrease, but it has been hovering between $45bn and $47bn, and that is very strong.

“In Africa, it is either the second highest or third highest. I think it is the second highest only after Algeria, and that’s really very remarkable.”

Sanusi said the move to invest the reserves in other currencies other than the dollar was necessary in view of recent events in the global economy that had driven yields to historical low levels.

The central bank boss said since the financial crisis of 2008, reserves managers had come under increased pressure to find ways of enhancing income.

This development, he noted, had made the CBN to diversify its reserve portfolios by investing in the Chinese Renminbi.

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