8 January 2014

Nigeria: External Reserves Fall By U.S.$301 Million As Naira Loses Two Kobo

The nation's external reserves continued its downward trend as it fell by $301 million to $43.31 billion from $43.61 billion in the first six days of 2014.

Meanwhile, the naira depreciated marginally by two kobo at the first foreign exchange auction conducted by the Central Bank of Nigeria, CBN, this year.

Data from the website of the apex bank showed that the external reserves fell consistently from $43.610 billion on December 31, 2013, to $43,308 billion on Monday January 6, 2014. This indicated a decline of 0.6 per cent decline.

Last year, the external reserves rose from $45.98 billion in January to a peak of $48.85 billion before falling steadily to $43.61 in December.

Results of the Retail Dutch Auction System, RDAS, session conducted by CBN yesterday, showed that the official exchange rate rose slightly to N155.72 per dollar from N155.70 at the last session held December 16 2013.

The depreciation was despite the $349.86 million at the auction, up from $399.98 million sold in the last auction of 2013. This indicates depreciation of two kobo.

The naira also depreciated at the interbank foreign exchange market by 39 kobo as the interbank exchange rate rose to N159.8 per dollar from N159.41 on Friday last week.

The naira, however, appreciated by 300 kobo at the parallel market from N173 per dollar to N170 per dollar.

In 2013, the official exchange rate was relatively stable throughout the year, but the interbank market exchange rate rose and fell in reflection of demand situation in the market.

From N158.84 per dollar at the beginning of the year, the interbank exchange rate rose by 3.2 per cent to its peak of N163.11 per dollar at the end of August.

It, however, fell by 1.9 per cent to close the year at N159.96 per dollar. The parallel market exchange rate however rose persistently during the year from N159 per dollar in January to a peak of N173 per dollar December 31, indicating depreciation of N13.

Reflecting the increased demand for foreign exchange, foreign exchange sales at the Wholesale Dutch auction System (WDAS) for the year rose to $25.37 billion, up by 32.9 per cent from $19.1 billion sold in 2012. From $3.88 billion in the first quarter, foreign exchange sale rose by 70 per cent to $6.62 billion. In the third quarter, it rose again by 22 per cent to $8.09 billion.

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