Nigeria’s External Reserves Surpass S40 Billion Amid FX Surge
Nigeria’s gross external reserves have reached a new high, crossing the $40 billion mark—an increase of $7 billion since the start of the year, according to data from the Central Bank of Nigeria (CBN). This marks the highest level for the reserves in 33 months, last seen in February 2022.
The growth has been attributed to improved diaspora remittances and consistent foreign interest in Nigeria’s fixed income market. While the CBN has not disclosed the exact sources of inflows, analysts suggest the rise is likely due to contributions from foreign portfolio investments, remittances, and favourable oil transactions.
Minister of Finance Wale Edun has maintained a target of $1 billion in foreign exchange inflows per month, an objective that appears to be driving the improved reserve figures. Confidence among foreign investors has been notably strengthened by recent economic reforms and the CBN’s clearing of its foreign exchange backlog earlier this year.
The latest CBN auction for Open Market Operation (OMO) bills attracted significant foreign participation, with investors staking a substantial $1.45 trillion on the bills. Analysts point out that foreign demand has been a key factor in pushing up investment interest in these bills, signalling positive sentiment toward Nigeria’s economic outlook.
However, despite the rise in reserves, the naira continues to experience downward pressure in the forex market, sparking debate on the effectiveness of maintaining high reserves while the local currency weakens.
