External Reserves Rise by $1.046bn in Less than 1 Months

25 Jan 2012

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Minister of Finance, Mrs Ngozi Okonjo Iweala


By Obinna Chima

The upbeat recorded by oil prices in the international market since this year has continued to reflect positively on Nigeria’s external reserves which had increased by $1.046 billion.


THISDAY findings showed that the reserves which stood at $32.915 billion as at December 30, 2011, had grown by 3.2 per cent, to $33.961 billion as at January 20. THISDAY check further showed that the reserves had maintained a steady growth since this year.

Oil prices climbed further on Monday as tensions increased over the security of oil shipments from the Persian Gulf. The price of oil had stayed around $100 per barrel in recent weeks on concerns about tanker traffic through the Persian Gulf.

Benchmark oil rose 67 cents to $99 per barrel Monday, while Brent crude rose by 50 cents to $110.36 per barrel in London. The price of Nigeria’s premium crude oil grade- Bonny Light according to findings, stood at $112.2 per barrel in the international market on Monday.

The reserve, which is derived mainly from the proceeds of crude oil production, had peaked at $62.2 billion as at May 2008. The external reserves closed last year at a low level of $32.9 billion, which was 0.6 percent less than its corresponding period of $33.1 billion in 2010.

Experts at the Financial Derivatives Company Limited (FDC) attributed the inability of the reserves to record significant accretion despite the relatively high oil prices, and crude oil production to the Central Bank of Nigeria’s use of the reserves to meet the demand gap of forex at the Wholesale Dutch Auction System (WDAS).

“Due to volatile oil prices and the uncertainty surrounding global markets, reserve growth has yet to pick up. Oil prices experienced significant volatility in 2011 fluctuating between a high of $126.64 per barrel and a low of $93.52 per barrel,” the investment and research firm explained in a report made available to THISDAY.

Commenting on the outlook for oil prices in the international market, it said: “The slowing economic growth and uncertain global economic outlook will increase risks in the oil market as oil price volatility is expected to persist in 2012. The Economic Intelligence Unit (EIU) forecasts a further decline in spot prices to $95 per barrel.

“The factors of demand and supply will determine how well crude oil prices will fare in 2012. OPEC has revised downwards its global oil demand forecast to grow by 1.2 percent to 88.87mbpd, and non-OPEC oil output of 5 3.13mbpd. Macroeconomic sentiments coupled with speculative activities will also play a major role in determining crude oil prices.”


http://www.thisdaylive.com/articles/external-reserves-rise-by-1-046bn-in-less-than-1-months/107845/

Am much more interested in how previous enormous withdrawals were spent.

what happened that our reserves dropped to that level?

ole gov. wetin them use previous money do?

What is d impact of this long grammar and staggering amount got to do with that old woman selling moi-moi at the Ochanja Market Onitsha?!!!RUBBISH!!!next>>>

Those who actually read the article will see where it is stated that the reserve depletion (mildly put as poor accretion) was due to the fact of it being used to defend the Naira at thwarting WDAS auction sales. Monetary policy!

Experts at the Financial Derivatives Company Limited (FDC) attributed the inability of the reserves to record significant accretion despite the relatively high oil prices, and crude oil production to the [b]Central Bank of Nigeria’s use of the reserves to meet the demand gap of forex [/b]at the Wholesale Dutch Auction System (WDAS).

The bolded is the major reason for the huge drops in our external reserves.

It is also the reason for the deprecation of the Naira against the Dollar. The demand for dollars in the forex market was largely driven by fraudulent subsidy requests; therefore, the sharp rise in reserves is directly connected to the removal of the old subsidy system.

that was after depleting it from the $32 Billion Obasanjo Left to $500 Million.

So its now Nigeria Money (subsidy removal) that we are using to increase our reserve. No more investment abi?

Beaf:

The bolded is the major reason for the huge drops in our external reserves.

It is also the reason for the deprecation of the Naira against the Dollar. The demand for dollars in the forex market was largely driven by fraudulent subsidy requests; therefore, the sharp rise in reserves is directly connected to the removal of the old subsidy system.

Can u put a monetary value to this? Like how many billion dollars are we talking about here to achieve this.

More money to share by the FG.

so our leaders are that daft that, they can't carry out  ''Market Gap Analysis''  
I smh for this nation. Bunch of thieves!!!

Beaf:

The bolded is the major reason for the huge drops in our external reserves.

It is also the reason for the deprecation of the Naira against the Dollar. The demand for dollars in the forex market was largely driven by fraudulent subsidy requests; therefore, the sharp rise in reserves is directly connected to the removal of the old subsidy system.

Dude, is demand for $$$ elastic or inelastic? If you can answer that question, I gotta educate you on the weakness of your PDP led government.

^
The CBN is independent. It is not governed by PDP, CPC, ANPP, APGA or ACN, so I guess you need to reeducate yourself, sir.

Demdem:

Can u put a monetary value to this? Like how many billion dollars are we talking about here to achieve this.

To acheive what, bruv? I don't get your question.

However, what we should really be looking at is how to the CBN to untie oil sales from physical dollars. If the oil price crashes today, Nigeria and the Naira will sink like a stone. The entire oil market is upside down, the subsidy was just the tail alone of a huge beast; we are looking at a country that is on the highway to perdition with its citizens urging the driver belt straight ahead, all done in innocent ignorance.

Put simply, CBN shouldn't be so tied to oil and the dollar shouldn't be so tied to CBN. Even the worst communist country doesn't run such a backward system. Nigeria is crying out for reforms and TOTAL RESTRUCTURING.

True federalism.

Wait a min.
Is NOI celebrating this or what?
That it fell from over $60b to the around $32b and grew by a mere $1.046 in about a month is a cause for cheers?

ITS FUNNY HOW THEY CAN TELL US EXTERNAL RESERVES HAS INCREASED OR HAS REDUCED WITHOUT ITEMIZING THE effect OF THIS NEWS TO THE COMMON MAN. AS NIGERIANS I THINK WE HAVE TO KNOW THE IMPORTANCE OF THIS THINGS. FOR EXAMPLE, THE EXTERNAL RESERVES HAS INCREASED, THEREFORE EXPECT A STRONGER NAIRA TO THE DOLLAR, OR EXPECT 0.005% REDUCTION IN THE COUNTRIES DEBTS OR EXPECT SOMETHING SIGNIFICANT. IF NOT THIS NEWS IS REALLY OF NO IMPORTANCE.
Please my fellow nls let us try to be more pragmatic in our dealings and think of the implications of our deeds today cos it would have an effect on our tommorrow.

Beaf:

^
The CBN is independent. It is not governed by PDP, CPC, ANPP, APGA or ACN, so I guess you need to reeducate yourself, sir.

Independent in deed! That is the answer you give when you lack capacity to debate the subject matter.
More so, you are yet to answer my question.

great news for economists while the common man continues with shuffering and smiling

Kx:

Wait  a min.
Is NOI celebrating this or what?
That it fell from over $60b to the around $32b and grew by a mere $1.046 in about a month is a cause for cheers?

When was it 60billion?
Cos GEJ inherited about 33billion.

success4:

Independent in deed! That is the answer you give when you lack capacity to debate the subject matter.
More so, you are yet to answer my question.

Dude, phuck off. I'm not interested in any sort of ignorant debate with those who argue stup!dly for the sake of it.

1. AUTONOMY OF THE BANK (SECTION 1(3)
The operational autonomy of the Bank is now clearly
expressed in line with international best practice. This will
not only facilitate the achievement of its mandate but will
also engender stakeholder confidence.

http://www.cenbank.org/out/publications/pressrelease/gov/2007/pr3-7-07.pdf

I guess these days every rat catcher, rewire and hunter knows more about CBN than its legal team.

You mean CBN's propping of the aira with $$$ made the reserve fall by about half?
Tell that to the marines.

Beaf:

Dude, phuck off. I'm not interested in any ignorant debate with people who argue stup!dly for the sake of it.

Olodo, good for you. Understanding of Market gap analysis zero
Understanding of elastic demand/inelastic demand zero
so you can continue wallow in your ignorance dude

What pisses me off about NOI is her worship of figures,that do not take into reality d unique nature of our economy that has a greater percentage in d informal sector.So when she brandishes all these IMF/world bank type statistics:so so debt reduction,revenue increase by $1b,subsidy removal to lead to building of this & that,I just know this woman is nothing but a testbook economist who cannot in seven lifetimes take us out of our economic gloom

success4:

Dude, is demand for $$$ elastic or inelastic? If you can answer that question, I gotta educate you on the weakness of your PDP led government.

In as long as there is demand for the variable ($$$), which affects quantity supplied, therefore $$$ is elastic. There's a FOREX relationship between the $$$ and the economy. Please let me know if my assertion is wrong about FOREX.

...pls delete

PointB:

Those who actually read the article will see where it is stated that the reserve depletion (mildly put as poor accretion) was due to the fact of it being used to defend the Naira at thwarting WDAS auction sales. Monetary policy!

Not really. The article says that reserves have not accumulated faster, despite the incredibly high price of fuel on the international market, due to the blah-blah forex and dutch auction system. What it doesn't say is why the account is in that shape in the first place and why we are even celebrating this absolute benign event. With our production rate (unknown but estimated 2mbpd), we make$ $20,000,000 daily before expenses, this 'news' is not worth talking about.

i thought the economy was in danger of collapsing?

Can you see how idiots are fighting over makeup figures, how can you proof the increment? The thief Ngozi never account for the 3% increment of whiteman share of the oil revenue till today and no one saying anything.

I hope this no be abracadabra moves oh!

manny4life:


In as long as there is demand for the variable ($$$), which affects quantity supplied, therefore $$$ is elastic. There's a FOREX relationship between the $$$ and the economy. Please let me know if my assertion is wrong about FOREX.

Agreed! I would have loved to expose BEAF lies, if he has continue with his ignoramus ranting

Fact or fiction?

What impact does this has on poor masses on the street Naija FG are bunches of hypocrites, i pray b/h should visit them and their family IJN.

Moodie:

Clearly, he doesn't have an idea what these concepts are, and I / (most of us) don't either. Can you kindly educate us.

I know you were talking to the other guy but let me explain further one of the question he asked earlier. The theory of elasticity is simply the relationship reaction between two variables that are directly (most cases) relative to each other. In other words, changing one variable affects one or multiple variables and elasticity is measured in % so its easier to better understand the changes.

If you understand the theory of Demand and Supply, regard to the article and my response, $$$ is in high demand, while the supply of $$$ is low, therefore there's price elasticity between the $$$ and its quantity supplied. Take for instance, when $$$ was sold at say N152+, the demand was high say $1million, however, when Naira was devalued to 160+, the demand for $$$ shrinks slightly say $900,000 why because an average buyer of the $$$ will have to spend extra N8 more to purchase a single $$$. If you want to know how it's calculated, let me know

That's the reason why the said CBN used the reserve to buffer the demand regardless of our Crude Oil Revenues. This is in part because Nigeria DOES NOT have any major source of FOREX other than Crude Oil Sales, sad but true. We import more than we produce which isn't healthy for the economy. Believe it or not, manufacturing accounted for 3.14% of our GDP, meanwhile retail accounted for close to 20% of our GDP, so ask your self, if we are indeed "supposedly" consuming the 3.14% of our manufacturing assuming we don't export (which is impossible), we have a net loss of almost 16% of our retail imported,