Nigeria’s forex reserves soar to $34.66bn, highest months

Nigeria’s external reserves have experienced a substantial surge, reaching $34.66 billion, marking the highest level attained in over 13 months.

This significant increase underscores a positive trend in the country’s foreign exchange holdings, driven by various factors including favorable oil prices and improved economic policies.

The latest figures indicate a notable recovery from previous declines in external reserves, aligning with broader efforts to enhance economic resilience and attract foreign investment.

The increase in reserves provides a buffer against external shocks and supports the country’s capacity to manage fluctuations in global commodity prices, particularly oil, which remains a key driver of Nigeria’s export earnings.

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Economic analysts and policymakers view the surge in external reserves as a positive development that could strengthen investor confidence and contribute to sustained economic growth.

It also highlights the importance of maintaining fiscal discipline and implementing reforms to diversify the economy away from oil dependency.

Looking ahead, stakeholders are optimistic about Nigeria’s economic prospects, buoyed by the resurgence in external reserves and ongoing efforts to enhance macroeconomic stability.

Continued monitoring of global economic trends and proactive policy measures will be crucial in sustaining this positive momentum and promoting inclusive growth across sectors.

On June 14, 2023, the Central Bank of Nigeria (CBN) unveiled a strategy to streamline the foreign exchange market by merging all segments into a single unified system.

This pivotal shift, aimed at fostering liquidity and stability within the Nigerian forex market, ironically seems to have precipitated increased market volatility and a precipitous decline in the naira’s value.

When the CBN announced the forex unification policy, Nigeria’s external reserves were at $34.66 billion. However, from July to December 2023, the reserves fluctuated within the $33 billion range.

Nigeria has been experiencing a surge in exchange rate in the last few weeks ending the month of June above $34 billion for the first time since April. The reserves have continued to swell in July hitting multiple highs that have now culminated in the highest reserve in the last one year.

However, since then, a gradual and consistent upward trajectory has been observed, coinciding with a period of exchange rate stability with the reserves eventually culminating into the $34.66 billion recorded on July 4, 2024.

In the past one month, the reserves have surged by 6 per cent from $32.78 billion recorded on the same day of the previous month.

The recent rise in forex reserves since May comes after three months of noticeable fluctuations when it plunged to a low of $32.11 billion on April 19, 2024.