The World Bank has stated that Nigeria’s external reserves expect to decline. As a result, the Central Bank of Nigeria (CBN) expect it to clear $1.7 billion worth of FX backlog.
However, the World bank disclosed this in a document. Which is titled ‘Nigeria Development Update (June 2022): The Continuing Urgency of Business Unusual. Nigeria’s external had been on a downward trend. Because of the continuous intervention by the CBN in the FX market in order to ensure the stability of the local currency.
In addition, the World Bank says, ”Boosted by higher oil exports, International Monetary Fund’s (IMF) Special Drawing Rights allocation in August. And an Eurobond issuance in September 2021, gross official reserves rose to US$41.3 billion at the end of 2021. Which is offering an opportunity for exchange rate change.”
Foreign reserves refer to assets held on reserve by the central bank of a country. Which is backing to liabilities and influences monetary policy. They include foreign banknotes, deposits, bonds, treasury bills, and other foreign government securities.
These assets is significantly held to ensure that a government or its agency has backup funds if their national currency rapidly devalues. Foreign exchange reserves is called international or external reserves.