Nigeria’s Foreign Exchange Reserves Climb Above $40 Billion Mark
Nigeria’s foreign exchange reserves have surged past the $40 billion threshold, hitting $40.16 billion last week. This growth is largely attributed to increased forex inflows and a slight rise in crude oil output. The Central Bank of Nigeria (CBN) disclosed that the reserves increased from $37.934 billion on April 30 to $38.298 billion by May 14, with steady growth continuing into July.
Oil Production Boosts Forex Reserves Amid OPEC+ Compliance
Nigeria’s crude oil output rose by 0.67% in July to 1.51 million barrels per day (mbpd), aligning with the OPEC+ quota of 1.5 mbpd for the third time this year. While still below the 2025 target of 2.06 mbpd, this increase supports higher forex earnings. The government anticipates further production growth in August, which is expected to contribute positively to the country’s forex reserves.
CBN’s Forex Reforms and Government Policies Strengthen Stability
The steady accumulation of reserves is also driven by reforms led by CBN Governor Olayemi Cardoso and policies aimed at boosting local production, reducing foreign exchange demand pressures, and controlling inflation. Initiatives such as improving diaspora remittances channels, granting licenses to new International Money Transfer Operators (IMTOs), and adopting a willing buyer-willing seller FX model have simplified forex access for businesses and individuals.
Diaspora Remittances and Diversified Forex Sources Aid Reserves Growth
Diaspora remittances, estimated at $23 billion annually, remain a crucial source of foreign exchange inflows for Nigeria. The CBN’s ongoing efforts to expand and formalize remittance channels, coupled with support for non-oil export earnings, aim to sustain and double forex inflows. Strengthening public confidence and promoting a stable exchange rate remain central to these monetary policies.
Experts Praise Improved Dollar Liquidity and Investor Confidence
According to Charlie Bird, Director of Trading at Verto, Nigeria’s improved dollar liquidity has balanced forex dynamics, allowing foreign investors and airlines to repatriate funds efficiently. Bird noted that these positive reforms have made Nigeria a favored destination for foreign investment, bolstering the naira’s stability and supporting overall economic growth.
Source: The Nation