Reserves Reaches Three Weeks High, Now $32.39bn

Stories by Nume Ekeghe

Nigeria’s external reserves surged to a three-week high, hitting $32.39 billion on May 8, 2024, marking a noteworthy recovery from previous declines.

Data sourced from the Central Bank of Nigeria (CBN) revealed this uptick, a level last witnessed on April 15 when reserves stood at $32.29 billion.

However, this figure reflects an 8.13 per cent decline compared to the $35.25 billion recorded on May 8, 2023.

In the recently conducted Article IV Consultation for Nigeria by the International Monetary Fund (IMF), the fund noted that the removal of foreign exchange market distortions was lauded, with a call for further enhancements in the FX market’s functionality.

It stated:” Directors commended the authorities’ actions to rein in inflation and restore market confidence. They stressed the importance of keeping a tight monetary policy stance to put inflation on a downward path, maintaining exchange rate flexibility, and building reserves. Directors welcomed the removal of foreign exchange market distortions and encouraged the authorities to continue improving the functioning of the FX market, including by adopting a well‑designed FX intervention framework. Some Directors also noted that carefully and sequentially phasing out capital flow management measures when warranted would be important. Directors supported the authorities’ intentions to shift to an inflation-targeting regime and recommended strengthening central bank independence and communication to ensure a successful transition.”

The report highlighted a strengthened fiscal position in 2023, attributed to various factors including revenue gains from naira depreciation and enhanced revenue administration. Moreover, prudent expenditure management facilitated a one-off wage increase to mitigate the impact of soaring inflation for public officials.

It added: “Gross international reserves declined in 2023 amid persistent capital outflow pressures. The naira depreciated sharply after the unification of the official foreign exchange windows in June 2023. Following monetary policy tightening in February and March 2024 and a resumption of FX interventions, the naira has started to stabilize.”