Nigeria’s External Reserves add $244m in seven days to cross $40bn

Nigeria’s external reserves increased by $244 million ( $244,727, 958) from $39,832,802,155 on November 1, to $40,077,530,113 on November 7.

The external reserves stood at $39.07 billion as of September 19, 2024, an increase of 17.4 percent compared with US$33.28 billion in the corresponding period of 2023. That was 8 months of import cover for goods and services and 13 months of imports of goods only.

An elated Governor of the Central Bank of Nigeria, Mr Olayemi Cardoso, last week confirmed that Nigeria’s foreign exchange reserves have reached over $40billion, marking their highest level in 33 months.

He made the disclosure during a symposium in Abuja on Thursday, which coincided with the unveiling of the compendium, “Promoting Stability in an Era of Economic Reforms: The Journey So Far”, celebrating the first anniversary of the Bank’s management team.

In his keynote address, Cardoso reflected on the milestones achieved under his leadership, stating that the reforms initiated by the Bank had begun to yield positive results.

The reserves had earlier grown by $7 billion from the beginning of the year to date, according to data from the Central Bank. Data shows that gross balance in the external reserves crossed $40 billion from $33.016 billion at the beginning of the year.

This surge was supported by improved remittances from Diaspora Nigerians and sustained yields attraction in the fixed-income market.

Though the CBN data is not specific about sources, analysts believe accretion came from foreign portfolio investors, remittances and oil deals.

Market expectation of resurgence in economic indicators and reforms have boosted foreign investors’ confidence following the Central Bank clearance of FX backlog early in the year.

According to data from the CBN, the gross balance on the nation’s external reserves reached $40.037 billion this week on the back of sustained FX inflows.

In its latest Open Market Operation (OMO) bills auction, foreign investors’ participation boosted total investment bets on the bills. Investors staked about $1.45 trillion on the OMO bills, which some analysts said was basically driven by foreign interest. Foreign reserves hit 33 months high, the last time Nigeria’s external reserves print at similar level was in February 2022 at $40.011 billion.

Despite the surge, the naira remains under pressures across the forex market, raising question on the purpose of a nation keeping external reserves high when the local currency is falling.