Nigeria: Foreign Reserves Fall By $6 Billion in one Month

Lagos — As the global credit crisis takes its toll on the world economy and further depresses oil prices, Nigeria's foreign currency reserves fell by $6 billion or 8.2 per cent in December last year to $52.7 billion.

Reserves in the month to December 29 dropped from $57.4 billion in November, the Central Bank of Nigeria said yesterday in its monthly report.

Record oil prices had helped Nigeria to build the largest currency reserves in sub-Saharan Africa, which peacked at $63 billion in September 2008.

But oil prices have plummeted since September 2008 after attaining a record high of $147 in July. Oil was trading below $42 in New York yesterday.

Foreign investors seeking safety amid the global credit crunch have withdrawn money from the country, leaving the CBN as "the only source" of foreign exchange, said Fola Fagbule, head of research at Afrinvest, a Lagos-based investment bank.

The naira has depreciated by more than 14 per cent in the past month after the CBN cut the amount of dollars sold to local banks at its twice weekly foreign currency auction.

On December 16, the CBN Governor, Chukwuma Soludo, said the currency was allowed to weaken to protect dwindling foreign reserves.

The Organisation of Oil Exporting Countries (OPEC) which produces about 40 per cent of the world's oil, cut production by 2.2 million barrels a day on December 17 in a bid to arrest the decline in crude prices.

Nigeria has the continent's biggest hydrocarbon reserves, with more than 30 billion barrels of crude oil and 187 trillion cubic feet of gas.

The country is the fifth-largest source of United States oil imports and the eight largest producer in the world.

http://allafrica.com/stories/200901050447.html

Sad that Soludo would have to leave in May this year. I wonder who the next CBN Governor would be and what intelligence he would have to handle the coming crisis.
I hope we don't get to that point where government would be delaying salaries and imports would be hard to finance.
God help Nigeria!

Thats why a good thinking country would not keep so much reserve while your people are suffering.

If they have used this $6billion to build roads, hospitals, schools, we would see the benefit now and it would also server as investment for our future instead everything LOST in a swoop.

It is criminal neglect.

Imagine, if Gowon had not built those fly-overs, road, all over Lagos during the 70s oil boom.

These same infrastructure have been serving Lagos and Nigeria since 70s.

It was blunder not to have spent anything on infrastructure, a big blunder. The problem is if money was released for infrastructure, they would have blundered the money as usual!
At the same time, it is very important to have lots of credit(reserves) to ensure that investors and business partners of Nigeria have some confidence!

I am not particularly a financial genius but i can sense that the guys running the present economy are as bad as my self when discussing issues about the economy compared to what what we saw with Soludo of OBJ times.

Tell me, how can any reasonable person change a winning macro economic policy?? These guys don't even know how to manage what they were handed over to not to talk of navigating the nation through stealthily through the impacts of the global financial meltdown.

Come on peeps, all hope is not lost, at least Nigeria can seek a loan from Obj since he had $16Bn siphoned into his personal account so we could replace the $6Bn easily by asking him (Obj) for a loan.

B.O.S.S.:

Come on peeps, all hope is not lost, at least Nigeria can seek a loan from Obj since he had $16Bn siphoned into his personal account so we could replace the $6Bn easily by asking him (Obj) for a loan.

well said.

OBJ stolen $16bill in only in one sector: Power.

what about other sectors: Oil, Gas, Health, Education.

We never ask 'hard questions' in Nigeria.