Nume Ekeghe
In a promising development for Nigeria’s economic stability, the country’s external reserves surged by 10.7 per cent over the past three months, rising from $33.30 billion on June 13, 2024, to $36.87 billion by September 12, 2024.
This impressive increase of $3.57 billion has been attributed to several key factors, including successful domestic dollar bond sales and favorable macroeconomic conditions.
Recent data from the Central Bank of Nigeria (CBN) revealed that a notable $621.2 million increase in the country’s foreign exchange (FX) reserves occurred within just 10 days, following the successful sale of a domestic dollar bond. Between September 2, when reserves stood at $36.24 billion, and September 12, when they reached $36.87 billion, the bond issuance played a crucial role in attracting foreign exchange inflows and boosting liquidity in the financial system.
The first significant uptick occurred on September 3, 2024, when reserves increased by approximately $30 million, climbing from $36.24 billion to $36.27 billion. Incremental gains followed over the next few days, with reserves rising to $36.30 billion on September 4 and reaching $36.33 billion on September 5. The real momentum came after September 6, 2024, when reserves jumped to $36.39 billion, and further to $36.64 billion by September 9. This $250 million surge over a single weekend highlighted strong investor demand for Nigeria’s dollar bonds and the increased foreign exchange inflows tied to the sale.
Nigeria’s external reserves began the period of review at $33.30 billion on June 13 and gradually increased to $34.19 billion by June 28. This growth of nearly $889 million reflects a steady accumulation, supported by remittance inflows and early signs of improvement in the trade balance.
Reserves rose sharply in July, starting the month at $34.34 billion on July 1 and ending at $36.79 billion by July 31. The increase of $2.45 billion was fueled by robust foreign direct investment, rising export earnings, and favorable global economic conditions. July marked a turning point in the country’s reserve position, reinforcing confidence in Nigeria’s economic policies.
August saw reserves peak, beginning the month at $36.83 billion on August 1 and reaching $36.87 billion by August 7, before stabilizing at $36.30 billion by the end of the month. Although there were minor fluctuations, the overall stability of reserves around the $36 billion mark reflected strong foreign exchange inflows from non-oil exports and remittances, despite routine portfolio outflows.
In early September, Nigeria’s external reserves were given a significant lift by the issuance of a domestic dollar bond. Reserves stood at $36.24 billion on September 2 but quickly climbed to $36.87 billion by September 12, marking a rise of $621.2 million within just 10 days. The bond sale attracted substantial foreign exchange inflows, reinforcing Nigeria’s financial position and providing a strong buffer against potential economic shocks.
In addition to the bond sales, other contributing factors to the overall rise in reserves include increased foreign direct investment, a positive trade balance, and robust remittance inflows from the Nigerian diaspora. CBN’s strategic management of the FX market has been central to stabilizing the reserves, reflecting effective monetary policy measures that enhance confidence in the Nigerian economy.
