Nigeria’s Foreign Exchange Reserves Jump by $86.67m: A new dawn for Naira stability

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Nigeria’s gross foreign exchange reserves have increased for the second consecutive week, growing by $86.67 million to $38.10 billion. This growth is attributed to strong measures instituted by the Central Bank of Nigeria (CBN) to attract more inflows to the economy.

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The CBN’s efforts to cultivate multiple FX sources have led to substantial accretion to the gross FX reserves and supported the stability of the naira. These measures include improving diaspora remittances through new product development, granting licenses to new International Money Transfer Operators (IMTOs), and implementing a willing buyer-willing seller FX model.

According to analysts, stronger forex reserves are expected to bolster the CBN’s capacity to manage excess naira volatility through sustained market interventions and achieve long-term stability of the exchange rate. The current reserves position could provide nearly 10 months of import cover and support the country’s drive for a stronger economy.

Charlie Bird, director of trading at Verto, said, “Dollar liquidity dynamic is now more balanced, with foreign investors and airlines able to repatriate funds.” He added that Nigeria is now the darling of foreign investors due to improved dollar liquidity in the economy, thanks to the CBN’s positive reforms.

The CBN has introduced two new financial products designed to serve Nigerians living abroad and attract more diaspora remittances. These products, the Non-Resident Nigerian Ordinary Account and the Non-Resident Nigerian Investment Account, aim to streamline remittances, encourage investments, and foster financial inclusion among Nigerians in the diaspora.

The CBN’s initiatives have supported continued growth in diaspora remittances, aligning with the institution’s objective of doubling formal remittance receipts within a year. With these efforts, the CBN aims to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, essential for sustained economic growth.

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