Petrol imports deplete reserves by $3b

The foreign reserves have declined by $3 billion to $39.72 billion in the last 30days, according to report published in a national newspaper yesterday.

The newspaper reported that the reserves, which were $42.77 billion on February 3, and dropped to $39.72 billion on March 3.

“Analysts said the reserves declined as imports of petroleum products and foods soared.

“The level of Nigeria’s external reserves has fallen precariously low to $43.63 billion as at December 30, last year. This is the lowest level since November 2012 and a decline of 10.7 per cent from 2013’s Year to Date peak of $48.86 billion.

“The continuous use of the external buffers to support the value of the naira, declining oil receipts are among the contributing factors to the depletion. However, this level of reserves is sufficient to fund an import bill of approximately seven months,” the report stated.

The publication stated that with over 50 per cent of foreign exchange utilised for the importation of fuel and food, the Central Bank of Nigeria (CBN) said the policy should focus on a comprehensive backward integration production strategy, while fast-tracking the repair of the existing refineries.

“As at October 10, the reserves were at $45.3 billion, as against $46 billion in September 19, and $47 billion in August 19, data from the CBN website showed.

“Further findings showed that the reserves were at $47.7 billion on July 1, and dropped to $47 billion on July 15. They also entered August 1 at $47 billion. The foreign currency reserves had five year ago, in August 2008, peaked at $68 billion before the global financial crises impacted negatively on it.

“Analysts said the reserves are assets held by the CBN and monetary authorities, mostly in dollar to back their liabilities, such as the naira.

“They explained that manipulating reserves levels can enable CBN intervene against volatile fluctuations in currency by affecting the exchange rate and increasing the demand for the naira.

“Analysis of foreign exchange utilised by sectors revealed that $7.83 billion was expended on the importation of visible goods into the country in the second quarter as against $6.63 billion and $7.74 billion in first quarter and second quarter of 2012. Also, a large part of the reserves were utilised in the importation of oil, industrial, food and manufactured products in the ratio of 30.3, 28, 20.4 and 13.3 per cent of the total,” according to the report.

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