Naira Strengthens as Nigeria’s External Reserves Hit Six-Year High of $43.42 Billion

Nigeria’s naira gained modestly against the U.S. dollar in the official foreign exchange market on Thursday, buoyed by a surge in the country’s external reserves to a six-year high of $43.42 billion. The appreciation comes amid renewed investor confidence and improved foreign exchange inflows, signaling optimism for Nigeria’s economic stability.

At the close of trading, the naira strengthened by N1.64, or 0.1 percent, reaching N1,441.44 per dollar, compared with N1,443.08 the previous day at the Nigerian Foreign Exchange Market (NFEM), according to data from the Central Bank of Nigeria (CBN). In contrast, the parallel or black market saw the naira weaken slightly, losing N2 to close at N1,457 per dollar.

The steady build-up in Nigeria’s external reserves marks the highest level since August 2019, when reserves stood at $43.60 billion. Analysts attribute the growth to stronger oil revenues, improved foreign inflows, and successful economic policy reforms, particularly following the strong subscription to Nigeria’s recent Eurobond issuance.

The Debt Management Office (DMO) reported that the Eurobond attracted orders exceeding $13 billion from investors in the U.K., North America, Europe, Asia, and the Middle East. The offering included a 10-year $1.25 billion bond with an 8.63 percent coupon and a 20-year $1.10 billion note at 9.13 percent. Local investors also participated, highlighting confidence in the government’s economic reform agenda.

Experts caution, however, that while the Eurobond inflows provide fiscal breathing space and bolster reserves, they also increase exposure to foreign exchange risks and interest obligations in hard currency. Continued efforts by the CBN to unify the FX market and clear backlogs will be critical to sustaining currency stability and maintaining investor confidence in the months ahead.

source: Business day