Nigeria’s Foreign Reserves Hit 22-Month High Amid Significant Inflows

Abuja, Nigeria – Nigeria’s foreign reserves have reached a 22-month high, reflecting a surge in foreign inflows to the country’s economy. According to data from the Central Bank of Nigeria (CBN), the reserves stood at $37.31 billion as of September 18, 2024, the highest level since November 4, 2022.

This significant increase marks a recovery in Nigeria’s foreign currency position, which has been under pressure in recent years. While the reserves are a crucial indicator of the country’s financial stability and its ability to meet international obligations, the falling naira, deemed one of the world’s worst-performing currencies, has remained a challenge.

Several factors have contributed to the rise in foreign reserves. The federal government’s domestic dollar bonds have attracted significant foreign investment, while remittance inflows from Nigerians abroad have also played a role.Additionally, multilateral loans from international organizations and foreign portfolio investments have boosted the reserves.

Year-to-date, the reserves have surged by 12.99%, or $4.29 billion, from the $33.02 billion recorded at the start of the year. Compared to the same period last year, the reserves have grown by 12%, adding $4.03 billion to the $33.28 billion recorded on September 18, 2023.

The federal government’s issuance of a $500 million domestic US dollar bond, part of a $2 billion program aimed at stabilizing the economy, has raised over $900 million from investors. 

Remittances from Nigerians abroad have reached $553 million in the past year, according to the CBN. Furthermore, the country has received $3.3 billion from the AfreximBank oil facility and $2.25 billion from the World Bank Group.

The CBN’s consistent policies have also contributed to the increase in foreign exchange inflows. Data shows a 57% surge in FX inflows in the past year, with February 2024 recording $8.86 billion compared to $5.66 billion in the same period the previous year.

New investments into the economy have also risen significantly, with foreign direct investment (FDI) reaching $0.06 billion in February 2024 from $0.03 billion in the preceding month. Portfolio investment inflows have increased to $0.80 billion from $0.12 billion, driven by rising returns on money market instruments and bonds.