CBN CONSIDERS MEASURES AGAINST CAPITAL REVERSAL
http://www.nigerianbestforum.com/blog/?attachment_id=122233 The Central Bank of Nigeria (CBN) has stated the need to put in place measures against capital reversal after portfolio inflow accounted for a huge chunk of foreign capital inflows into the country.
The foreign capital inflow had gone up from $3.24 billion by 77 per cent to $6.07 billion in the third quarter of 2012 with portfolio flows accounting for 76 per cent of total inflows during the period, while foreign direct investment accounted for the remainder.
According to the External Sector Development Report issued by the CBN, 'The continued dominance of portfolio investment in aggregate foreign capital inflows suggests the need to put in place measures against capital reversal', adding that the 'increase in the inflow of foreign direct investment and portfolio investment in Q3, 2012 was quite impressive.'
The current-account surplus rose to $5.03 billion, or 7.6 per cent of gross domestic product, from $5 billion in the second quarter, while exports rose by 4.2 per cent from the previous three months to $24.4 billion, with imports dropping by 22 per cent to $12 billion.
The apex bank noted that the estimated capital and financial accounts of the country recorded a higher deficit of US$9.54 billion in the third quarter of the year, a development which it said was 'attributable to the sharp increase in liabilities to other economies influenced largely by portfolio investment inflows.'
Meanwhile, Nigeria's trade balance improved significantly from US$8.62 billion in Q2, 2012 and $1.59 billion in Q3, 2011 respectively to US$12.37 billion in Q3, 2012 as aggregate exports rose by 8.2 per cent from US$22.53 billion in Q3, 2011 to US$24.37 billion in Q3, 2012 while aggregate imports declined by 42.7 per cent to US$11.99 billion in the review period.