The current position of the reserves which are derived mainly from the proceeds of crude oil earnings represents a significant decline by
The CBN has been using the reserves to support the nation's currency which has been under intense pressure in recent times.
But the Acting CBN Governor, Dr.
"The Bank has the capacity to meet the demands of all foreign exchange users," she had said.
Nonetheless, a report by the Sub-saharan
"Despite our expectation of tighter monetary policy this year, we still forecast the naira to weaken further to average N170 in 2014," the report added.
It therefore downgraded its "recommendation to underweight (from market weight)," saying that the sustainability of the N150-N160/
According to the report, the decision of President
The presidency last week suspended Sanusi over allegations of financial recklessness.
To this end, the report argued that the due to the turmoil caused by Sanusi's suspension, the spread at the forex market would widen further as risk aversion increases.
"This means the CBN will have to work even harder to keep the naira in check," it stated.
It noted that in
The naira then climbed to N165 to a dollar, six per cent above the upper end of the band at the time.
"If market sentiment worsens from here; we believe the government can afford to commit 15 per cent of current reserves (
"However, if market sentiment worsens to extreme levels (perhaps due to excessive portfolio outflows or a sustained fall in the oil price) then the current band would become unsustainable," it added.
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