The foreign exchange reserves of the nation appreciated to $38.49bn on July 18, increasing by 3.8% from $37.09bn of June, owing to a more stable currency according to data released by the Central Bank of Nigeria.
As a result of slow demand for the dollars and increased dollar flows from independent sources other than the central bank, the naira has remained steady against the dollar for the past two weeks around N161.5-N162.25.
The data also disclosed that the country’s forex reserves were down by 18% year-on-year from $46.93bn on July 18, 2013
The CBN which is battling to maintain a stable exchange rate had used up the nation’s external reserves by $17.58bn in the first half of this year in a bid to save the naira from further depreciation.
The cumulative sum of $17.58bn was sold by the central bank to 50 currency dealers at the Retail Dutch Action System between January and June this year.
Compared to the $10.68bn sold in the same period in 2013, the $17.58bn which was sold in the first half of 2014 is about 65% higher.
Financial and economic analysts said the 65 per cent increase in demand for foreign exchange during the first half of the year was too enormous; pointing out that the unfortunate situation was responsible for the huge depletion of the nation’s foreign reserves.
On Monday, after some importers took advantage of its recent appreciation against the greenback to lock in rates, the naira had eased against the dollar by 0.21%.
Reuters reported that the currency eased after last week’s gains, closing at N162.25 to the dollar on Monday.
The naira which was lifted by dollar flows from oil companies and off shore investors buying local deals traded around N161.45-N161.90 last week.
Volatile oil earnings, falling dollar reserves, delayed upside from the power reforms, among other factors have combined to upset naira’s exchange rate stability.
The naira, which traded N150 band for long after the volatility of 2009 occasioned by the world financial crisis, has struggled to stabilize at N160 region for many months now.