Nigeria’s external reserves have hit a 22-month high of $37.31 billion, boosted by significant foreign investment in Africa’s largest economy.
The efforts have yet to have a significant impact on the struggling naira, listed by Bloomberg as one of the world’s 10 worst-performing currencies as of September 20.
The reserves are a vital indicator of the nation’s capacity to meet international financial commitments and stabilize its currency.
Central Bank of Nigeria data shows that as of September 18, 2024, the country’s foreign reserves reached their highest level since November 4, 2022, when they stood at $37.36 billion, marking a significant recovery in Nigeria’s foreign currency position.
Nigeria’s external reserves have hit a 22-month high of $37.31 billion, driven by substantial foreign investments in the continent’s largest economy. Despite this, the surge has yet to significantly bolster the struggling naira, recently ranked among Bloomberg’s 10 worst-performing currencies.
The reserves serve as a crucial measure of the nation’s ability to meet international financial obligations and stabilise the local currency.
Data from the Central Bank of Nigeria (CBN) reveal that as of September 18, 2024, the reserves hit the highest level since November 4, 2022, when they stood at $37.36 billion. This marks a notable recovery in Nigeria’s foreign currency position.
On a year-to-date basis, the country’s reserves surged by 12.99 percent, or $4.29 billion, from the $33.02 billion recorded at the start of the year on January 2, 2024.
Several factors have contributed to the increase in external reserves. Key sources of the inflows include: the federal government’s domestic dollar bonds, which attracted foreign investment; remittance inflows from Nigerians abroad; multilateral loans from international organisations; and foreign portfolio investments.
Ayokunle Olubunmi, head of financial institutions ratings at Agusto Consulting, said the major driver is the domestic dollar bond.
“It’s primarily the domestic bond proceeds. The uptick in diaspora remittance and portfolio investments also supported the surge.”
When compared year-on-year, Nigeria’s foreign reserves grew by 12 percent, adding $4.03 billion to the $33.28 billion recorded on September 18, 2023.
