Nigeria’s foreign reserves have increased by more than $1.4 billion within a month, hitting $33.58 billion as at June 19th, 2024. This figure is the highest level since March 28, 2024. This marks a significant financial milestone in Nigeria’s quest for increased foreign exchange reserves.
This significant increase in FX reserves is also coinciding with the longest period of stable exchange rate seen in over a year. The exchange rate has remained largely within the N1,500 to 1$ average for over a month now. The volatility of the past few months has considerably ebbed.
There is also considerable convergence between official rates and the going rates at the parallel section of the foreign exchange market over the past one month. The official exchange rate has averaged N1,481/$1 this month while rates at the parallel market averaged N1,490/$1
This relative exchange rate stability is linked to increased liquidity in the foreign exchange market which has seen a remarkable rise in daily turnover to $199 million daily in 11 days of trading in June compared to $168 million in the same period in May. In fact total FX turnover so far in June is $2.1 billion, achieved in 11 days of trading.
Better days seem to be ahead for the foreign reserves going by the string of financial commitments Nigeria has secured from some global financial institutions including the World Bank through new multilateral loans as well as Afreximbank bank.
The World Bank recently approved $2.25 billion in loans to Nigeria to boost the country’s economic stability and support its vulnerable populations. Less than 40% of the loan has been disbursed by the World Bank. Afreximbank has also so far announced the disbursement of a total of $3.175 billion to Nigeria in several tranches as part of a $3.3 billion crude oil-backed loan agreement it entered into with the NNPC last year.
Recently, at the Afreximbank Spring meeting in The Bahamas, Nigeria announced another $3.5 billion deal with Afreximbank to finance the revitalisation of the Nigerian textile industry and investment in CNG-powered vehicles among other targeted areas of investment.
The CBN on its part is also planning to double the diaspora remittance inflows into Nigeria this year as part of efforts to improve forex liquidity in system and further achieve stability in the exchange rate and invariably have a lid on the inflation rate.