Nigeria’s external reserves stood at $27.840 billion as at last Thursday. The latest position of the reserves showed that it has depreciated by $251 million this month, compared with the $28.091 billion it was at the beginning of this month.
However, in terms of its year-to-date performance, the foreign exchange reserves, which are derived mainly from the proceeds of crude oil sales has decreased by $1.138 billion, compared with its value of $28.978 billion as at January 4, 2016.
There are projections that the reserves may depreciate further considering international obligations and bilateral agreements that had been entered by the country whose payments are from the reserves as well as the settlement of large swap positions between the banks and the Central Bank of Nigeria (CBN). According to estimates, the overall swap books of some Nigerian banks stood at about $5 billion, with most of it to be paid back this year.
Crude oil prices continued to march higher in choppy trade on Monday, gaining on hopes of production cuts to help rebalance an oversupplied market. On the New York Mercantile Exchange, light, sweet crude futures for delivery in March rose 39 cents, or 1.4 per cent, to $29.83 a barrel, while April Brent crude gained 31 cents to $33.67 a barrel.
The gains came amid continued talk of a potential meeting between members of the Organisation of the Petroleum Exporting Countries. Such talk periodically buoys the market amid hope that OPEC will agree to cuts in supply.
Oversupply had been the biggest culprit in keeping oil prices in the doldrums for the past two years. However, prominent suppliers, such as Saudi Arabia, Iran, and Russia have been reluctant to scale back production, fearing the US shale producers would swoop in and expand their market share. To prevent that, OPEC had kept production high, with the aim that the persistently low prices will eventually drive away competitors, according to marketwatch.com.
Speaking in a recent interview, the Chief Executive Officer, Heritage Bank Limited, Mr. Ifie Sekibo, stressed the need for Nigerians to begin looking inwards for the goods and services they consume.
He explained: “As a country, today, we are nearly 80 per cent dependent on imports. But our purchasing power for those imports is affected by the price of the singular commodity that gives us majority of the funding that we need to do the import. Oil price had come down within the last six months, tending towards $20 per barrel.
“From as high as $120, to around $60, it is presently around $28 per barrel. With this, a rational human being would want to cut down on importation. But as a country, we have not stopped importing. All of us the elites send our children out abroad and we pay school fees from the same money that we don’t have. We travel for medicals and it is same money we are talking about. People carry their electronic cards, travel and buy gold, silver, grocery; tea; coffee and they are not taxed.
“These are items that are not necessary. So, can we as a country resolve to begin to buy made-in-Nigeria goods or spend less of our money in frivolity? When we do that, then devaluation becomes a sensitive thing to do. We are mainly import dependent. Even the made-in-Nigeria goods we are to produce, we would need to import the raw materials for the plants and machinery.”