Despite her economic woes, Nigeria’s is managing to keep her external reserves ups, rising by $1.88 billion to hit $34.66 billion as July kicks off.
This is the highest level the external reserve has touched since the introduction of the foreign exchange (FX) unification policy, back in June 2023, according to a report by Nairametrics.
The growth in reserves is also on the back of a string of financial commitments from Afrexim Bank and the World Bank through loans and the CBN introduced a string of FX reforms.
On June 14, 2023, the Central Bank of Nigeria (CBN) unveiled a strategy to streamline the foreign exchange market by merging all segments into a single unified system.
This pivotal shift, aimed at fostering liquidity and stability within the Nigerian FX Market, ironically seems to have precipitated increased market volatility and a precipitous decline in the naira’s value.
When the CBN announced the FX unification policy, Nigeria’s external reserves were at $34.66 billion. However, from July to December 2023, the reserves fluctuated within the $33 billion range.
According to Nairametrics research, the external reserve hit $34.66 billion as of July 4th 2024 the highest in over a year.
This is only second to the $34.69 billion achieved on the 13th of June 2023, just before the exchange rate was unified by the government.
Nigeria has been experiencing a surge in exchange rate in the last few weeks ending the month of June above $34 billion for the first time since April. The reserves have continued to swell in July hitting multiple highs that have now culminated in the highest reserve in the last one year.
The central bank Governor had to address the issue of the decline at the last IMF Spring meeting, where he said that the decreasing reserves were primarily due to debt repayments and other standard financial obligations, rather than efforts to defend the naira.
However, since then, a gradual and consistent upward trajectory has been observed, coinciding with a period of exchange rate stability with the reserves eventually culminating into the $34.66 billion recorded on July 4, 2024.
In the past one month, the reserves have surged by 6% from $32.78 billion recorded on the same day of the previous month.
