Data from the Central Bank of Nigeria revealed that as of September 18, 2024, the external reserves hit the highest level since November 4, 2022, when they stood at $37.36 billion.
The figure marks a notable recovery in Nigeria’s foreign currency position, indicating a significant foreign inflow into the country’s economy as the external reserves hit a 22-month high.
External reserves represent the country’s stock of foreign currency.
Unfortunately, it appears that the development has failed to make a real impact on the falling naira, which was adjudged one of the 10 worst-performing currencies in the world by Bloomberg on September 20.
The reserves serve as a crucial measure of the country’s ability to meet international financial obligations and stabilise the local currency.
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.
When compared year-on-year, Nigeria’s foreign reserves grew by 12 per cent, adding $4.03 billion to the $33.28 billion recorded on September 18, 2023.
The Federal Government raised over $900 million from investors through the issuance of $500 million, the first series of the $2 billion domestic US dollar bond aimed to stabilise the economy.
Nigeria recorded $553 million in remittances in one year, between July 2023 and July 2024, according to the CBN.
Other inflows into the country’s economy within the period include $3.3 billion AfreximBank oil facility and $2.25 billion from the World Bank Group.
The foreign exchange inflows through the economy surged by 57 percent in one year following consistent policies by the CBN.
Data from the CBN showed that the country recorded $8.86 billion in FX inflow in February 2024, higher than $5.66 billion in the corresponding period of February 2023.
The CBN’s economic report for February 2024 noted that new investments into the economy increased significantly to $1.24 billion, compared with $0.33 billion in January 2024.
Foreign direct investment inflow rose to $0.06 billion, from $0.03 billion in the preceding month.
Portfolio investment inflow increased to $0.80 billion from $0.12 billion, following rising returns on money market instruments and bonds.
Similarly, other investment capital, mainly loans, rose to $0.37 billion, from $0.18 billion in the preceding period.
