Nigeria’s external reserve hit a new milestone in June, rising to $34.07 billion, the highest level since March 2024.
This information comes from the Central Bank’s external reserve position as of June 26, 2024.
Nairametrics reported last week that the external reserve reached a three-month high when it rose to $33.5 billion.
Reserves have continued to surge since then, topping $34 billion for the first time since March 21, when it was $34.2 billion. The external reserves have now swelled by a substantial $1.3 billion since June.
However, the main drivers of the growth in reserves remain unclear.
What this means
The rise in FX reserves comes after three months of noticeable fluctuations when it plunged to a low of $32.11 billion on April 19, 2024, sparking concerns about the nation’s financial stability.
Recall, in April the central bank Governor had to address the issue at the last IMF Spring meeting.
However, since then, a gradual and consistent upward trajectory has been observed, coinciding with a period of exchange rate stability. The official exchange rate has averaged N1,481/$1 this month and has depreciated or appreciated within a band of plus or minus 0.06%.
What you should know
The Monetary Policy Committee (MPC) recently urged the CBN to focus on boosting the external reserves, and the apex bank has been committed to this.
To ensure a steady flow of foreign exchange into the country, which will further strengthen the country’s external reserves, the CBN plans to double the diaspora remittance inflow this year.
Also, Afrexim Bank earlier announced the disbursement of $925 million- another tranche of the $3.3 billion crude oil-backed loan agreement it entered into with the NNPC last year. The bank disclosed this in a statement on its website stating that the current disbursement brings the total payment for the facility to $3.175 billion. This loan is expected to help stabilize the forex market in light of the severe volatility.
The World Bank recently approved $2.25 billion in loans to Nigeria to boost the country’s economic stability and support its vulnerable populations. This financial infusion is intended to provide immediate financial and technical support for Nigeria’s urgent economic stabilization efforts.
Earlier this week, the CBN governor, Yemi Cardoso, said that the country recorded a total foreign exchange inflow of about $24 billion in the first quarter of 2024. Cardoso noted that the rise in FX liquidity in the first quarter of 2024 is the highest in any quarter since 2021. The CBN boss also said that the apex bank has set up a committee to facilitate more inflow of diaspora funds into the official FX market.
The rise in forex inflow is expected to further boost Nigeria’s external reserves, which have been on a steady rise.
