By Yemi Kolapo with agency report
Nigeria‘s foreign reserves fell to $45.39bn in May from $47.02bn the previous month, the Central Bank of Nigeria said on Tuesday.
The reserves had steadily declined in the last seven months from $57.48bn in November due to a sharp fall of the naira against the United States dollar, according to Reuters.
The price of oil, Nigeria‘s biggest foreign exchange earner, also fell in the period, while a violent campaign by militants in the Niger Delta region slashed the country‘s crude production and exports.
The CBN said in its latest assets and liabilities statement that Nigeria‘s reserves stood at N7.02bn in March.
The on-going global financial crisis has continued to weigh down on the country‘s external reserves.
As at October 2008, the reserves stood at $58bn, but dropped to $57bn in November 2008; $52bn in December, and further sank to $51bn by January 20, 2009.
However, year-on-year consumer inflation in Nigeria dropped to 13.2 per cent in May, from 13.3 per cent the preceding month, according to the National Bureau of Statistics.
The NBS said in its monthly report on Tuesday that growth in food prices, which constituted the bulk of the inflation index basket, rose to 15.7 per cent in May, up from 15.3 per cent the previous month.
”The rise in the index was caused by increases in the prices of food items like bread, fish and seafood, fruits and potatoes,” NBS said.
Inflation rose on a month-on-month basis, with the composite consumer price index up 3.6 per cent to 201.0 points in May, Reuters reported on Tuesday.
The country’s inflation, which had been maintained at single digit by the apex bank for over two years, rose in the wake of rising global prices of food and energy costs, to 13 per cent mid 2008, and further to 14.7 per cent by October last year, until the recent drop.
The global financial meltdown is likely to send the rate further south as less funds are available for spending, according to experts.
The country’s foreign reserves fell to $45.39bn in May from $47.02bn the previous month, the CBN said on Tuesday.
Meanwhile, the CBN sold $126.61m at N146.70 to the US dollar at its foreign exchange auction on Monday, short of the $135.56m demanded by end-users, traders said on Tuesday.
According to Reuters, the regulator had sold $175.5m at N146.75 per dollar on Thursday, again below the $196.6m demanded.
Dealers said transactions on the interbank market were thin because of tight naira cash, which was expected to ease this week on the inflow into the system of monthly budgetary allocations to government agencies on Monday.
The naira traded between 148.20-148.40 to the dollar on the interbank market, while it was 168 to the dollar on the black market, traders said.
The apex bank replaced its daily auctions with bi-weekly trading on May 25, after removing forex market controls imposed mid-March to conserve Nigeria‘s falling foreign reserves and to strengthen the naira.
The easing of the forex restrictions allowed retail banks to buy dollars from oil firms and government agencies and sell on the interbank market.
Banks are still not allowed from selling dollars purchased from the CBN on the interbank market