Forex reserves drop by $1.58bn

Nigerias foreign exchange reserves have dropped by $1.58bn.After moving up from $32.989bn on October 13 to $34.599bn on October 14, the forex reserves commenced a free fall which lasted for nine days.The first decline to $34.532bn as stated by the Central Bank of Nigeria was recorded on October 17, and thereafter, the losses persisted till October 27, 2011, to close at $33.02bn.Analysts have noted that the CBN, in a bid to strengthen the local currency, often use the countrys reserves to stabilise the naira against the greenback, thus reducing the reserves.Also, to strengthen the naira, the bank said it would intervene in the inter-bank market to either buy or sell, noting that interested dealers in the intervention were to submit their bids and offer rates for specific amounts.In the continuing effort to sustain stability in the foreign exchange market, the CBN shall from time to time intervene in the inter-bank market. This is in addition to (auctions), the bank said in a circular to Deposit Money Banks signed by its Director, Trade and Exchange Department, Mr. Batari Musa.THE PUNCHhad exclusively reported that the Nigerias forex reserves recorded an all-year low on October 30,2011 when it fell to $30.862bn.Meanwhile, analysts have said the apex bank must do all it could to save the local currency from falling to N160 to the dollar.They explained that, the drop in the countrys foreign reserves was expected following the unstable nature of the naira. The analysts stressed that the measures adopted by the bank would have been commendable if the two-day gain, which the naira recorded early last week were sustained.The naira strengthened against the dollar last week and for it to have been falling shows that changes will always come, the Executive Secretary, Financial Market Dealers Association of Nigeria, Mr. Wale Abe, said.Let us watch the currency movement in the coming weeks before we draw conclusions concerning the CBNs tightening measures,he said.The Managing Director, Economics Associates, Dr. Ayo Teriba, had told our correspondent that the apex bank really has to do something strategic to save the naira from severe collapse.
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