Nigeria’s Foreign Reserve Drops To $41bn

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A Central Bank of Nigeria, (CBN) report released last week in Abuja said Nigeria’s foreign reserve dropped from $42 billion to $41 billion.

The report, The Movement in Reserves, posted on the CBN website, said the reserve stood on $40.5 billion as at March 25, 2010.

It said the reserve had earlier been hovering on $42 billion, sometimes rising to $43 billion and $44 billion in the third quarter of last year.

In January and February 2010, the reserve hovered between $42 billion and $43 billion.

Report said that the reserve picked up in August 2009 after months of steady decline from $61 billion in mid 2008.

The reserve, which rose to more than $61 billion in mid 2008, entered a free fall in the second half of the year when crude oil prices started fluctuating.

The reserve dropped to $52 billion by the end of 2008 and continued to fall, reaching as low as $41 billion in some months.

The reserve, tied to the pricing of crude oil as Nigeria’s major foreign exchange earner, cruises along with the pricing of the oil in the international market.

The price of crude oil rose to an all time high of $147 in March 2008, but dropped to less than $42 by the close of 2008.

The slide in the price of crude oil pushed the reserve down and also triggered a dependence on the excess crude account to supplement the 2009 budget.

The benchmark for crude oil per barrel in the 2009 budget was $45 per barrel.

The National Assembly, however, pegged the benchmark for the 2010 budget at $67 following an improvement in the price of crude.