Nigeria’s foreign exchange (FX) reserves have increased significantly by $621.2 million over a 10-day period, attributed to the successful sale of a domestic dollar bond.
As of September 12, 2024, Nigeria’s gross FX reserves had risen from $36.24 billion on September 2 to $36.87 billion. According to data from the Central Bank of Nigeria (CBN), this growth reflects the positive impact of the domestic bond sale on the nation’s reserves.
Details of the Increase
On September 2, 2024, Nigeria’s reserves stood at $36.24 billion. Within the next 10 days, the reserves gradually climbed to $36.87 billion by September 12. Key movements during this period include:
- September 2-3, 2024: Reserves increased from $36.24 billion to $36.27 billion, showing an initial gain of around $30 million.
- September 4-5, 2024: The reserves continued to rise, reaching $36.30 billion and then $36.33 billion, indicating a steady influx of foreign exchange.
- September 6, 2024: A more significant rise was noted as reserves hit $36.39 billion, signalling the growing effectiveness of the CBN’s bond strategy.
- September 6-9, 2024: Reserves surged to $36.64 billion, reflecting a robust $250 million increase over the weekend due to strong demand for Nigeria’s dollar bond.
- September 10-11, 2024: The reserves climbed further to $36.73 billion and then $36.81 billion.
- September 11-12, 2024: The largest single-day increase occurred, with reserves jumping by $54.4 million to $36.87 billion.
Context and Implications
In August 2024, Nigeria’s FX reserves had dipped by approximately $505.68 million, marking a 1.37% decrease. This decline was the most significant monthly drop since April 2024. The recent rise in reserves is linked to Nigeria’s domestic dollar-denominated bond issuance, which successfully attracted over $900 million in subscriptions.
The $500 million bond, managed by the Africa Finance Corporation (AFC), was issued with a 9.75% annual coupon and saw a 180% subscription rate. This issuance is seen as a milestone for Nigeria’s economic development and demonstrates increasing confidence in the country’s capital markets.
The bond attracted diverse investors, including local Nigerians, expatriates, and major institutional investors. It will be traded on the Nigerian Exchange Limited (NGX) and FMDQ Securities Exchange Limited (FMDQ Exchange), enhancing the liquidity of Nigeria’s financial markets.
This development comes at a crucial time for Nigeria, as the country navigates economic challenges and strives to stabilize the naira amidst global currency fluctuations.
