Nigeria Content Online

Nigeria’s foreign
reserves have been fluctuating in the last one week, as the Central
Bank of Nigeria (CBN) battles to sustain the value of the naira.

The reserves peaked
at $40.887 billion on 12 May, its highest level in the last one month.
Since then, the figure has recorded a steady decline, dropping to
$37.540 billion on 8 June, about a month later. The figure rose by 2.21
percent the following day, to close last week at $38.373 billion.

The marginal rise
in the reserves is attributable to the improvement in Nigeria’s crude
oil output, which also took a dip in June. According to data released
by Reuters, preliminary loading programmes showed Nigerian crude oil
exports would average 2.18 million bpd in July, rising from 1.95
million bpd in June and 2.13 million bpd in May.

Forex demand

The Nigerian
currency, which sold at N148.88 at the end of the Wholesale Dutch
Auction System (WDAS) bidding session yesterday, has been under a lot
of pressure lately following increased foreign exchange demand, which
has left the CBN at a dilemma over whether to devalue the currency or
dip into the foreign reserves to meet demand.

The naira has been
relatively stable in the last few months, fluctuating between N148.35
and N148.93, a marginal band of 0.39 percent, while the foreign
reserves have caved in to high foreign exchange demands. For instance,
a total of $1.71 billion was sold by the CBN at the last five auctions
of the WDAS, with $350 million sold in the final auction last week. The
CBN has always maintained that it will meet legitimate demands for
foreign exchange, warning speculators to desist from unnecessary demand
for foreign exchange.

The CBN has thus
stepped up effort to ensure genuine foreign exchange demand in order to
check speculation and capital flight. It last week informed all
authorised dealer banks and other reporting institutions about a review
of the deadline for the submission of monthly returns on foreign
exchange transactions to its Trade and Exchange Department.

A circular signed
by Batari Musa, director, stated that all monthly returns via the
electronic Financial Analysis and Surveillance System (eFASS), shall be
submitted not later than the fifth day of the following month.

“However, where the
fifth day falls on a weekend or public holiday, the returns shall be
forwarded the next working day.” According to the circular, this is in
a bid to ensure timely collation and analysis of returns for policy
initiation and /or review.

The CBN is under obligation to sustain the naira at a maximum N150
to the dollar, which is the benchmark value captured in the 2010 budget.