By Ayomide Otitoju
Nigeria’s external reserves have surged to a 22-month high, reaching $37.31 billion as of September 18, 2024, according to data from the Central Bank of Nigeria (CBN). This marks the highest level since November 4, 2022, when reserves stood at $37.36 billion, signaling a strong recovery in the country’s foreign currency reserves.
Despite this boost in reserves, the naira remains under pressure, ranking among the top 10 worst-performing currencies globally, according to Bloomberg on September 20. The external reserves, which reflect Nigeria’s ability to meet international financial obligations and support the local currency, have not yet provided significant relief to the naira’s decline.
On a year-to-date basis, Nigeria’s reserves have increased by 12.99%, or $4.29 billion, from $33.02 billion on January 2, 2024. Year-on-year, reserves grew by 12%, adding $4.03 billion to the $33.28 billion recorded on September 18, 2023.
Several factors have driven this rise, including federal government domestic dollar bonds that attracted foreign investors, remittances from Nigerians abroad, multilateral loans from international organizations, and foreign portfolio investments. Notably, the federal government raised over $900 million through the issuance of a $500 million bond, the first in a $2 billion domestic US dollar bond series aimed at stabilizing the economy.
Additionally, Nigeria recorded $553 million in remittances between July 2023 and July 2024. Other key inflows include a $3.3 billion oil facility from Afreximbank and $2.25 billion from the World Bank.
Foreign exchange inflows into the Nigerian economy surged by 57% year-on-year, driven by consistent CBN policies. In February 2024, the country recorded $8.86 billion in FX inflows, compared to $5.66 billion in February 2023.
The CBN’s February 2024 economic report highlighted a significant increase in new investments, rising to $1.24 billion from $0.33 billion in January. Foreign direct investment doubled to $0.06 billion from $0.03 billion, while portfolio investments soared to $0.80 billion from $0.12 billion. Additionally, investment capital, mainly loans, rose to $0.37 billion from $0.18 billion during the same period.
