How Nigeria's external reserves grew by $2.29 billion in three months

• Data from the Central Bank of Nigeria (CBN) shows that Nigeria's FX reserves have increased by $2.29bn in three months
• According to the reports, Nigeria’s reserves now stand at $38.92 billion as of October 19, 2024
• The increase in the nation’s reserves raises hopes for the naira's recovery against the US dollar

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Nigeria’s external reserves rose by $2.29 billion in three months, up from $36.01 billion by July 19, 2024, to $38.93 billion by October 19, 2024.

Data from the Central Bank of Nigeria shows that the reserves grew by 8.1%, showing an improved inflow of FX into Nigeria and a positive shift from the country’s external reserves.

Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso Credit: CBN/Picture Alliance/Contributor
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Breakdown of reserves’ growth

The last time the country’s reserves rose to the limit was on September 9, 2022, at $38.92 billion.

During the period under review, the country's reserves stood at $36.01 billion on July 19, 2024.

The reserves showed steady growth throughout July, ending the month at $36.79 billion, an increase of $785 million in just two weeks.

The upward movement continued in August as the reserves hit $36.83 billion by August 2 and grew steadily to $36.87 billion by August 6 2024.

However, the reserves reversed to $36.83 billion, showing strength and marginal growth, adding $50 million between July and August 2024.

The CBN data shows that the reserves rose by $833 million in July and August, a 2.3% growth in under two months.

September saw a turning point in Nigeria’s reserves, beginning at $36.24 billion.

The nation’s reserves increased throughout September, growing from $36.24 billion as of September 2 to $38.35 billion by the end of the month.

Sources of inflows

The sharp increase in reserves during the month shows a significant improvement in FX exchange inflows, possibly driven by more substantial oil export revenues, external borrowing, and increased investor interest in Nigeria’s financial markets.

The data shows that the reserves grew by 5.8% by the end of September, making it the highest growth recorded during the three months under review.

In October, the momentum continued as the reserves grew throughout the month, reaching $38.92 billion by October 17, 2024.

The continued rise of the reserves saw an increase of $570 million in just two weeks.

According to reports, the reserves increased by $129 million between October 14 and 19, demonstrating sustained inflows into Nigeria’s account.

By mid-October, the reserves rose to $38.92 million, marking a high point for Nigeria. They grew by 1.5% from the beginning of the month to mid-October.

CBN shows sources of $2.33 billion inflow

Legit.ng earlier reported that CBN disclosed that foreign exchange inflows via International Money Transfer Operators (IMTOs) rose by 47% to $2.33 billion in the first six months of this year relative to the $1.58 billion recorded in 2023. 

The development comes amid the apex bank’s policies allowing eligible IMTOs to access naira liquidity at the official forex window. 

Recently, the apex bank released some measures to boost the FX markets and increase remittance inflows via formal channels.

Experts predict stronger naira

Experts believe that the increase in the country’s FX reserves will positively impact the value of the country’s currency, the naira.

They believe that with the increase in reserve, the apex bank will better defend the naira from further crashes in the foreign exchange market.

Economist and senior banker Janet Ogochukwu lauded the CBN and its reserve managers for consistently growing the money.

“This is a positive result, which we believe will affect the naira positively and increase its value.

We have always advocated for a robust reserve because it translates into a stronger and more stable currency,” she said.

Dollar exchange rate drops by over N60

Legit.ng previously reported that the Nigerian currency improved against the United States dollar at the official Nigerian Autonomous Foreign Exchange Market (NAFEX).

According to data from the FMDQ securities naira exchange, it closed at N1,600.78/$1 compared with N1,660.49/$1 in the previous session.

The improvement in the value of the naira was helped by forex liquidity increasing by 6.2% or $20.54 million to $350.72 million from the $330.18 million achieved a day earlier,

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Source: Legit.ng