Nigeria's foreign reserves have hit $38.06 billion for the first time in nearly two years, marking a significant rebound in the country's external finances as of September 27, 2024.
The last time Nigeria's reserves reached this level was in October 7, 2022, following a period of financial turbulence driven by declining oil prices, FX shortages, and rising import costs. Since then, the reserves declined and hovered below $38 billion struggling to recover due to various macroeconomic challenges.
The journey to $38 billion started earlier in 2024 when reserves dropped to a low of $32.7 billion in May. However, a combination of strategic reforms by the Central Bank of Nigeria (CBN) and a rise in global oil prices has since fuelled the recovery. By August 2024, reserves had crossed $36 billion and continued a steady climb through September.
From August 2024, reserves gained momentum, increasing by $1.7 billion within two months. Notable daily gains were recorded, including a jump from $36.64 billion on September 9, 2024, to $37.24 billion by September 17, 2024. This steady build-up culminated in reserves reaching their current peak.
This resurgence comes amid renewed efforts by the CBN to stabilise the naira and manage inflationary pressures. With external reserves playing a key role in the central bank's ability to intervene in currency markets, the rise in reserves signals improved capacity for Nigeria to manage its external obligations and boost investor confidence.
The peak of $38 billion reflects a blend of favourable global oil prices, remittances, and improved export earnings.
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Commenting at the recently concluded Monetary Policy Committee meeting (MPC) on remittances which play a significant addition to the reserves, the Governor of CBN, Olayemi Cardoso said: "As at August, it was $585 million, now that is a big deal, and it's over 130 per cent for the corresponding period last year. That is a big deal. And I want to just say to you that this didn't drop from the ceiling. It didn't it was a deliberate, calculated effort.
"We recognised in the central bank that certain things were not happening and that there was a need for the central bank itself to see what it could do with respect to encouraging inflows into the system. And IMTOs was one of those sectors where we liberalised and encouraged the operators in that sector to open accounts, and we are normally dealing with them on a regular basis to ensure that that number begins to go up.
"Because we were at a loss when everybody went to the international forum, and people will talk about how the Diasporas are all out there, they want to do all kinds of things in the economy, and why is it that we are not able to get that as a source of inflow for our economy and that we started that process of engagement. And I'm happy to say that it has paid off. Having said that we're not going to rest on our laurels. We are going to continue, and they will have some very innovative products and ways of engaging that sector and we are pretty confident that if we continue in that trajectory, that figure will continue to go up."
