Nigerian foreign reserves drop by US$220 million

moneycoinNaira's value was affected due to the drop in crude oil prices in the international market. (Image source: sxu.hu)Nigerian foreign reserves dropped to US$37.242 billion in the four days preceeding Friday, June 22, 2012, according to Central Bank of Nigeria (CBN)

The reserves stood at $37.462 billion at the end of the previous week after registering a drop of $220 million for the week.

The naira was affected due to a drop in crude oil prices in the international market, which caused the Nigerian currency to fall against dollar by NGN 1.15 (US$0.006) to close at NGN 162.40 (US$0.997) per US$1.

The local currency, however, remained stable and at the bi-weekly auction closed at NGN 155.90 (US$0.957) per US$1 even as the apex bank reduced its supply to $300 million, from the $400 million it sold on the previous Monday.

The Budget Office of the Federation (BOF) director general, Bright Okogu, said the drop in price of crude oil in the global market did not pose a threat to the 2012 budget.

He had earlier expressed fears related to the drop in crude oil prices, brought in largely by the Eurozone debt crisis, which he said could have a negative impact on the implementation of the budget and increase pressure on the Central Bank of Nigeria (CBN) to devalue the naira.

Standard Bank markets strategist Samir Gadio said the flattening and marginal decline in reserves was expected since the CBN had increased the size of its forex sales at the Wholesale Dutch Auction System (WDAS) as well as the regulator’s intervention at the interbank segment of the forex market to support the naira.

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