The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has announced a significant boost in Nigeria's foreign reserves, which increased by 12.74% to $39.12 billion as of October 11, 2024.
Cardoso disclosed this during a meeting with the House of Representatives Committee on Banking Regulation on Tuesday, October 15. He explained that the reserves had been at $34.70 billion at the end of June 2024, showing a substantial recovery in a few months. This rise follows a sharp decline earlier in the year, when reserves dropped to $32.29 billion on April 15, 2024, the lowest in over six years.
"The reserves have experienced substantial growth, with remittances now contributing 9.4% to our total foreign reserves," Cardoso said. He attributed this increase to foreign capital inflows, crude oil taxes, and other third-party receipts.
He also noted that Nigeria maintained a current account surplus in the second quarter of 2024 and saw improvements in the trade balance. The country's external reserves, he emphasized, are strong enough to cover over 12 months of imports for both goods and services or 15 months for goods alone, far exceeding international standards.
Cardoso discussed ongoing reforms in the foreign exchange market, highlighting the unification of exchange rate windows through the "willing buyer, willing seller" model. This initiative was aimed at increasing foreign exchange liquidity and enhancing market transparency. "The reform has improved transparency, reduced distortions, and streamlined foreign exchange allocation," he explained.
He also pointed out that the CBN had resumed foreign exchange sales at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) and Bureau De Change (BDC) segments, which were supported by increased inflows from foreign portfolio investors. The narrowing gap between exchange rates in these segments has restored market confidence and enabled the CBN to clear existing foreign exchange backlogs.
Cardoso further highlighted that the CBN's efforts to settle legitimate outstanding foreign exchange obligations have improved Nigeria’s global financial standing. "This has boosted Nigeria's credibility in the global market, improving investor confidence and enhancing liquidity in the foreign exchange market," he said.
He noted that foreign investments had increased as a result of improved investor confidence, with capital importation rising by 65.56% to $6.49 billion between January and July 2024, compared to $3.92 billion during the same period in 2023.
Cardoso concluded by emphasizing that these collective actions have contributed significantly to the stability of Nigeria's financial system.
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