Nigeria’s external reserves have reached a 22-month high of $37.31 billion, indicating substantial foreign inflows into the economy.
Data from the Central Bank of Nigeria (CBN) shows that as of September 18, 2024, reserves have risen to their highest level since November 4, 2022, when they were recorded at $37.36 billion.
This marks a significant recovery in Nigeria’s foreign currency position.
The external reserves represent the country’s stock of foreign currency; however, they have not effectively mitigated the decline of the naira, which Bloomberg ranked among the 10 worst-performing currencies in the world on September 20. These reserves are critical for assessing the country’s ability to meet international financial obligations and stabilize the local currency.
Year-to-date, Nigeria’s reserves have surged by 12.99 percent, or $4.29 billion, from the $33.02 billion recorded at the beginning of the year on January 2, 2024.
Several factors have contributed to this increase in external reserves, including foreign investment attracted by the federal government’s domestic dollar bonds, remittance inflows from Nigerians living abroad, multilateral loans from international organizations, and foreign portfolio investments.
Year-on-year, Nigeria’s foreign reserves increased by 12 percent, 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 a $500 million bond, the first series of a $2 billion domestic US dollar bond aimed at stabilizing the economy.
According to the CBN, Nigeria recorded $553 million in remittances over the year from July 2023 to July 2024.
Additional inflows during this period included a $3.3 billion oil facility from AfreximBank and $2.25 billion from the World Bank Group.
Foreign exchange inflows into the economy surged by 57 percent in one year, attributed to consistent policies by the CBN.
Data from the CBN revealed that the country recorded $8.86 billion in FX inflows in February 2024, an increase from $5.66 billion in the same period in February 2023.
The CBN’s economic report for February 2024 noted a significant rise in new investments into the economy, reaching $1.24 billion compared to $0.33 billion in January 2024.
Foreign direct investment inflows rose to $0.06 billion, up from $0.03 billion in the previous month. Portfolio investment inflows increased to $0.80 billion from $0.12 billion, driven by higher returns on money market instruments and bonds. Additionally, other investment capital, primarily loans, rose to $0.37 billion from $0.18 billion in the prior period.