Nigeria’s beleaguered external reserves have appreciated slightly by $292 million this month to $38.142 billion on Monday.
The latest value of the external reserves represents a marginal accretion of 0.8 per cent, compared to the $37.850 billion it stood on April 1.
Financial market analysts attributed the gradual accretion of the reserves, which are mainly derived from proceeds of crude oil sale to the dwindling appetite for the United States dollars at the forex market.
Nigeria’s forex reserves had suffered a sharp decline over the past three months, dropping from $42.85 billion at the end of December 2013 to $37.83 billion as at March 20, 2014.
The erosion was then attributed to the pressure on the naira and the determination of the central bank to maintain price stability through repeated interventions in the forex market.
This pressure on the naira was sustained for several months and had heightened argument over whether or not the currency should be officially devalued.
The Deputy Governor, Operations, CBN, Dr. Kingsley Moghalu had said revenue leakages from oil theft have continued while uncertainty remains over the fate of the yet-to-be adopted Petroleum Industry Bill.
“The Excess Crude Account (ECA) has been severely depleted in recent months, resulting in marked domestic and international concerns over the absence of safety buffers for the Nigerian economy in the event of any shocks,” he had said.
The Monetary Policy Committee (MPC) had at its last meeting unanimously agreed that a continuation of a tight monetary policy was needed to consolidate external reserves accretion.
The MPC had noted that prudent monetary stance would also facilitate better forex reserve and exchange rate management in an environment where Fed Reserve tapering increases pressure on emerging economies financial markets.
According to the committee, there are uncertainties in the domestic and international market environment.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane maintained yesterday that the central bank would soon accept the reality of naira devaluation earlier than anticipated, adding that excess liquidity in the system may become a real problem.
He said the higher amount of money shared at the monthly Federation Account Allocation Committee (FAAC) meetings despite shortfall in oil revenue was not in the best interest of the country because it meant reserves and other savings were being depleted to make up for the shortages.