Nigeria’s external reserves have remained stagnant at US$48 billion for over three months as a result of the volatility in crude oil prices, according to an independent outfit, Financial Derivatives Company Limited (FDCL).
The private Punch newspaper on Monday quoted the FDCL as saying in its monthly publication that the domestic oil output has been negatively affected by several disruptions such as pipeline vandalism, bunkering and force majeure.
It warned that a further decline in global oil prices to US$90 per barrel would be devastating for the Nigerian economy, as the reverberations of the shocks would hamper any form of growth across all sectors of the economy.
Brent crude oil for last Wednesday closed at US$102.96 per barrel, while the United States crude stood at US$95.75 per barrel.
Global oil prices had declined by six per cent from US$107.23 per barrel at the end of the first quarter.
Similarly, Nigeria’s bonny light crude stood at US$105.5 per barrel last Wednesday, 0.96 per cent higher than US$104.5 per barrel recorded the previous week.
“As the value of the naira falls towards N165 to a dollar at the parallel market and the likelihood for capital flight increases, external reserves will be depleted by about US$10bn to US$15bn from the current level of US$48.5bn.
”The resultant US$33.5bn to US$38.5bn will only cover an average of eight months of exports which may lead to increase in the country’s borrowing,” the publication said.
The reserves, which stood at US$48.47 billion last week, up from US$48 billion mark on 11 March. Since then, they have been up and down within the mark.
The external reserves, which rose steadily since 2012 due to reasonably high oil prices and stability in the foreign exchange market, however, started dropping in April.
Contrary to Government’s plan to raise the country’s external reserves to US$50 billion by the end of last year, the reserves closed in 2012 at US$44.26 billion.
Figures obtained from the CBN showed that the reserves closed the year US$6 billion below the Government’s US$50 billion target.
Although the reserves rose by US$11.34 billion, representing a 34 per cent increase in 2012 from US$32.92 billion in 2011, it failed to meet the country’s projection.