Diving oil revenues and capital outflows have depleted Nigeria's central bank reserves perilously close to below$30bn.Less than two years ago the Central Bank of Nigeria had grossreserves of almost $50bn, but its warchest has been deflated by locals hoarding dollars as the Nigerian naira has slumped, and eroding oil revenues as crude prices have tumbled.Analysts say that even the headline reserve figure of $30.13bnis somewhat illusory, given that it includes $2.1bn from Nigeria's Excess Crude Account and interventions in forward and swaps markets have not been fully accounted for.Alan Cameron of Exotix, a brokerage, estimates that the true reserve figure is closer to $28.1bn, equal to just over four months' worth of imports and "fast approaching a critical level". The naira has stabilised somewhat of late, but only thanks to a 17 separate new measures and policies, he points out.The superficial impression is one of a central bank lacking aclear strategy. Yet for all the confusion of the last few months, the reality is that the CBN is being asked to carry the burden ofa very difficult adjustment on its own.The government did little to help during the good times, in our view, running down savings when oil prices were high, andis now at a political impasse over the 2015 budget. With parliament on recess until after the poll, it could be July beforethe eventual 2015 budget is implemented. Until then, any talk of "austerity" should be taken with a pinch of salt.Analysts and investors therefore widely believe that the Nigerian naira is going to be devalued further this year. Non-deliverable forwards indicate the currency is expected to fall to N263 per dollar over the next 12 months – another 32 per cent decline.
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