By Babajide Komolafe

The nation’s external reserves fell by $588 million last week, reversing the gains of the previous week.

The movement in reserves published by the Central Bank of Nigeria (CBN) on its website show that two weeks ago, the reserves rose by $0.462 million to $33.943 million from $33.481 million. It, however, dropped to $33.355 million at the close of last week.

On Monday, it dropped to $33.858 million but rose slightly on Tuesday to $33.869 million. But on Wednesday and Thursday, the reserves fell persistently to $33.371 million and $33.354 million respectively.

The decline in reserves might have been aided by the increase in foreign exchange supply at the Wholesale Dutch Auction (WDAS) sessions conducted last week.

The apex bank in a bid to halt the persistent depreciation of the dollar, increased the amount sold by 33 per cent to $799.89 million from $600 million the previous week. This was however, 10 per cent short of the $889.75 million demanded at the two sessions.

The increase in supply however, helped the naira appreciate by seven kobo as the official exchange rate closed the week at N153.32 from N153.39 per dollar the previous week.

Meanwhile, the rising trend of cost of funds at the interbank money market was halted on Friday by the inflow of N163.33 billion for statutory allocation to the three tiers of government.

Prior to the inflow on Friday, scarcity of funds intensified in the market pushing interest rates up from Monday to Thursday. Interest rates on Call lending, 7 Days lending and 30 Days lending rose by 54 basis points, 67 basis points and 37 basis points to 10 per cent, 10.5 per cent and 11.66 per cent respectively. But on Friday, the inflow caused the rates to decline and closed at 9.62, 10.17 and 11.46 per cent respectively.

However, despite the scarcity of funds in the market, government securities recorded more than 200 per cent oversubscription. Total public subscription to the N70 billion worth of treasury bills offered by the CBN stood at N237.21 billion. Investors demanded for interest rates from 9.2 per cent to 15 per cent while the stop rate was 11.039 per cent.

Subscription to the N35 billion worth of three years bills stood at N100.21 billion while subscription to the five years bills was N137 billion. Investors demanded for interest rate from 10.5 to 15 per cent while the stop rate was 12.23 per cent.