NIGERIA’s foreign reserves fell 2.78 percent month-on-month to $47.11 billion by July 11, Central Bank of Nigeria, CBN, data showed Friday. Reserves at Africa’s second biggest economy stood at $48.46 billion on June 11. They have risen about 30 percent year-on-year this month, from $36.47 billion in the same period last year. Currency dealers say Nigeria’s reserves declined over the past month because the central bank sold hard currency at its forex auctions and directly to lenders in the interbank market to prop up the naira The CBN in its external sector statistics monitor Q1 2013 reported that the level of external reserves as at end-March, 2013 stood at US$47.88 billion compared to US$43.83 billion and US$35.20 billion in the preceding and corresponding quarters, respectively. According to the CBN, the current level of reserves could finance 22.8 months of current foreign exchange disbursements and 11.2 months of imports compared to 16.8 and 10.8 months of foreign exchange disbursements as well as 10.7 and 6.7 months of imports recorded in Q4 and Q1, 2012 respectively. Also, the CBN said the external reserves recorded an accretion of US$4.05 billion and US$12.68 billion in Q1, 2013 over its level in Q4 and Q1, 2012 respectively, largely due to positive terms of trade shock. The CBN affirmed that the vulnerability of the Nigerian economy to short term capital flows increased with the rising ratios of short term capital flows to external reserves at 12.7, 12.8 and 14.3 percent, respectively, in Q3 and Q4, 2012 and Q1, 2013. The report said the US$47.88 billion total external reserves as at end-March, 2013 in its holdings in US dollar constituted US$41.27 billion or 86.2% indicating increases of US$4.31 billion and US$12.60 billion when compared with its level of US$36.96 and US$28.67 billion in Q4 and Q1, 2012, respectively. “Other currencies in the basket included; Euro (5.1%), Chinese Yuan (1.7%), GB pounds (1.6%) and SDR (5.2%),” the report said. Further analysis by the CBN revealed that the reserve portfolio was dominated by fixed deposits (54.7%), funds under Asset Management (18.4%), JVC cash call (5.6%) and current account (9.7%) as well as Sovereign Wealth Fund (SWF) (2.1%). The CBN further affirmed that aggregate demand for foreign exchange by the authorised dealers consisting of wDAS and BDC operators during the review period stood at US$4.88 billion indicating an increase of 13.9% and a decrease of 32.6% when compared with the levels recorded in the preceding and corresponding quarters, respectively. The report also indicated that a total of US$4.56 billion was supplied in Q1, 2013, consisting of US$3.59 billion and US$0.97 billion to the wDAS and BDC operators, respectively. “This indicated a decline of 33.2% and an increase of 6.9% when compared with the corresponding and preceding quarters of 2012, respectively,” the CBN said. On major uses of the foreign exchange, a total of US$10.40 billion was utilised in Q1, 2013 compared to US$10.22 billion and US$10.00 billion utilised in Q4 and Q1 2012, respectively. The CBN reported that the total amount utilised in the review period consisted of US$6.62 billion and US$3.78 billion for visible and invisible trade, representing 63.7 and 36.3%, respectively. “This pattern of domination by visible trade was evident during the three quarters analysed,” the CBN said.
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