Nigeria’s external reserves rise to $34.66bn, highest in 13 months

Onwubuke Melvin
Onwubuke Melvin

Nigeria’s overseas reserves have risen again, this time by $1.88 billion to $34.66 billion as of July 4, 2024, a thirteen-month high.

This was revealed in the foreign reserve historical data foreign ofCentral Bank of Nigeria, according to Nairametrics.

The surge in foreign reserves is partly due to a series of financial commitments from Afrexim Bank and the World Bank in the form of loans, as well as the CBN’s implementation of a series of foreign exchange reforms.

On June 14, 2023, the CBN announced a plan to streamline the foreign exchange market by consolidating all segments into a single, unified system.

This fundamental adjustment, aimed at promoting liquidity and stability in the Nigerian FX Market, appears to have resulted in heightened market volatility and a precipitous drop in the naira’s value.

When the CBN announced the FX unification policy, Nigeria’s external reserves stood at $34.66 billion. However, between July and December 2023, the reserves fluctuated in the $33 billion area.

The external reserve reached $34.66 billion on July 4, 2024, the highest level in over a year.

This is only second to the $34.69 billion obtained on June 13, 2023, just before the exchange rate.

Nigeria’s exchange rate has risen in recent weeks, closing the month of June above $34 billion for the first time since April. The reserves continued to grow in July, reaching successive highs that have already resulted in the greatest reserve in the last year.

At the last IMF Spring meeting, the central bank Governor stated that the drop in reserves was mostly due to debt repayments and ordinary financial commitments, rather than measures to defend the naira.

However, since then, there has been a continuous and consistent increasing trend, corresponding with a period of exchange rate stability, with reserves eventually reaching $34.66 billion on July 4, 2024.

The Monetary Policy Committee has urged the CBN to focus on increasing external reserves.

To ensure a consistent flow of foreign cash into the country, the CBN intends to double diaspora remittance inflows this year.

Afrexim Bank also announced the transfer of $925 million, another tranche of the $3.3 billion crude oil-backed loan arrangement it signed with the NNPC last year. The bank announced this on its website, adding that the new disbursement takes the total payment for the facility to $3.175 billion. This loan is meant to help calm the FX market, given the high volatility.

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