Nigeria’s foreign exchange (FX) reserves have demonstrated remarkable stability, holding firm at $33.16 billion, which signals economic steadiness despite rising inflation and minimal fluctuations in the naira’s value.
This stability comes after the naira appreciated by 0.1% week-on-week, closing at N1,482.72/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) and at N1,480/$1 in the parallel market. However, inflation remains a concern, reaching a three-decade high of 33.95% in May, up from 33.7% in April, largely driven by surging food prices.
The country’s FX reserves saw an increase of $273.77 million week-on-week, bolstering confidence in Nigeria’s financial health. Despite this, total market turnover dropped by 46.4% to $683.83 million as of June 13, with trades fluctuating between N1,400.00/$1 and N1,505.00/$1. Dollar supply by willing sellers and buyers nearly doubled on Friday, suggesting a significant but temporary boost in FX liquidity.
Economic analysts are cautiously optimistic about the naira’s prospects, especially with the World Bank’s approval of a $2.25 billion loan, which could enhance the Central Bank of Nigeria’s (CBN) ability to manage FX liquidity. Experts like Charles Fakrogha emphasize that stable FX reserves are crucial for maintaining economic stability, investor confidence, and effective inflation management.
Source: THE SUN