Nigeria’s external reserves have grown again and now stand at $35.05 billion as of July 8, 2024.
The central bank’s data, reviewed by Newslodge, confirms this increase.
This is the highest level since May 30, 2023, when reserves were $35.09 billion, just before Nigeria introduced a new foreign exchange (FX) policy in June 2023. It’s the first time under President Bola Tinubu’s administration that the reserves have exceeded $35 billion.
The rise in reserves is due to the central bank’s new FX policies and financial support from banks like Afrexim Bank and the World Bank, who provided loans.
What the data shows
When Bola Tinubu became Nigeria’s 16th president on May 29, 2023, the country’s reserves were about $35.09 billion.
However, when the Central Bank of Nigeria (CBN) announced the new FX policy, reserves had fallen to $34.66 billion.
From July to December 2023, reserves stayed around $33 billion.
This year, reserves showed significant changes, reaching a low of $32.11 billion on April 19, 2024.
The central bank governor explained at an IMF meeting that the fall in reserves was mainly due to debt payments and other financial obligations, not efforts to support the naira.
Since then, reserves have been steadily increasing, alongside improved exchange rate stability.
By the end of June, reserves were over $34 billion, marking the first time since April. This trend continued into July, bringing reserves to the highest level in a year.
From April, when reserves were at their lowest under Tinubu, they have grown by $2.94 billion in less than three months.
What you should know
The Monetary Policy Committee (MPC) recently urged the CBN to work on increasing the external reserves.
To ensure there’s enough foreign exchange, the CBN plans to double the inflow of remittances from Nigerians living abroad this year.
Afrexim Bank also announced that it has given $925 million, part of a $3.3 billion oil-backed loan agreement with the NNPC. The bank said this brings the total payment for the facility to $3.175 billion, which is expected to help stabilize the foreign exchange market amid volatility.
The World Bank recently approved $2.25 billion in loans to Nigeria to help boost economic stability and support vulnerable populations. This money is to provide quick financial and technical support for Nigeria’s urgent economic needs.
Even as reserves rise and Nigeria gets more financial support, Fitch noted that there’s still a lack of clear information about the exact size and composition of Nigeria’s FX reserves. This remains a constraint on the country’s credit profile.