Nigeria’s foreign exchange reserves have soared to their highest level since March 28, 2024, marking a significant financial milestone.
This increase coincides with the longest period of stable exchange rates seen in over a year, bolstered by a series of financial commitments from the World Bank through new multilateral loans.
According to the latest data from the Central Bank of Nigeria, the reserves stood at $33.58 billion as of June 19, 2024. This represents a notable recovery from the end of March 2024, when reserves were $33.83 billion before experiencing a period of decline.
The rise in FX reserves follows three months of noticeable fluctuations, during which they plunged to a low of $32.11 billion on April 19, 2024, raising concerns about the nation’s financial stability. In response, the central bank governor addressed the issue at the IMF Spring meeting in April.
Since then, a gradual and consistent upward trajectory has been observed, alongside a period of exchange rate stability. The official exchange rate averaged N1,481/$1 in June, with fluctuations within a narrow band of plus or minus 0.06%.
The CBN data indicates that forex reserves have risen by 5%, or $1.47 billion, over the past two months. Specifically, reserves increased from $32.11 billion on April 19, 2024, to $33.58 billion by June 19, 2024.
This growth reflects a substantial boost in the country’s external reserves, as the CBN continues to implement policies that attract forex liquidity.
Critics, however, note the improved liquidity position, attributing it to a range of central bank policies over the last year and several promises of potential forex inflow from foreign portfolio investors. The Monetary Policy Committee (MPC) has recently urged the CBN to focus on further boosting external reserves.
In its 295th meeting, the MPC stated, “The Committee also noted the marginal increase in the external reserve balance between March and April 2024 and urged the Bank to sustain its focus on accretion to reserves.”
To ensure a steady flow of foreign exchange, the CBN plans to double the diaspora remittance inflow this year. Additionally, the African Export-Import Bank (Afrexim Bank) announced the disbursement of $925 million, part of a $3.3 billion crude oil-backed loan agreement with the Nigerian National Petroleum Corporation.
This disbursement brings the total payment for the facility to $3.175 billion, expected to help stabilize the forex market amid severe volatility.
Moreover, the World Bank recently approved $2.25 billion in loans to Nigeria to enhance economic stability and support vulnerable populations. This financial infusion aims to provide immediate financial and technical support for Nigeria’s urgent economic stabilization efforts.
