Nigeria’s external reserves have surged to a 22-month high of $37.31 billion as of September 2024, driven by significant foreign inflows, including domestic dollar bonds and remittances.
This marks a 12.99% year-to-date increase, signaling a recovery in the country’s foreign currency stock.
Despite this, the naira has continued to depreciate, becoming one of the world’s worst-performing currencies, according to Bloomberg.
Several factors contributed to the rise in reserves, such as the issuance of domestic US dollar bonds and remittances, alongside multilateral loans.
However, the naira has depreciated significantly, losing 49.56% of its value in the official forex market within a year.
The Central Bank of Nigeria (CBN) has not been able to stabilize the naira, with analysts citing a lack of confidence in the currency market and rising demand for foreign exchange.
The CBN Governor, Olayemi Cardoso, pointed out that the simultaneous decline in dollar supply and increased demand, particularly for education and healthcare, has worsened the situation.
Experts suggest that while rising reserves offer some support, addressing oil sector security and boosting crude oil production remain crucial for long-term foreign exchange stability.