Foreign reserves gain $2.61bn in July 2024

Nigeria’s foreign reserves appreciated by $2.61billion in July despite several foreign exchange interventions to strengthen the local currency, according to the latest data obtained from the Central Bank of Nigeria (CBN).

The CBN recently approved the sales of foreign exchange to eligible Bureau De Change (BDCs) to meet the demand for invisible transactions in a decisive step to strengthen the naira.

Data from the CBN foreign reserves that closed July 2024 at $36.8 billion, gaining about $2.61 billion or 7.62per cent from $34.19 billion it closed the previous month.

Further findings by WESTERN POST revealed that foreign reserves in seven months of 2024 gained 3.89billion or 11.8per cent from $32.91billion it closed 2023.

As gathered by WESTERN POST, the reported $36.8 billion is the highest since 2023.

Foreign reserves, also known as foreign exchange reserves, are assets held by a country’s central bank in foreign currencies.

Amid increase in foreign exchange reserves, naira at the foreign exchange market depreciated to N1,611.21 against the dollar in July from N1,469.691 against the dollar it closed June 2024.

In a circular signed by A. A Mahdi, the Acting Director, Trade and Exchange at the CBN, the bank announced the $35.93 billion as of June 18, 2024 is the highest since February 2023 when Nigeria’s external   exchange buffer crossed the $36 billion mark.

According to analysts at Cordros Research, Nigeria’s foreign exchange reserves hit its highest level in 16 months, as the gross reserve level increased by $557.70 million week-on-week to $35.93 billion, attributable to the disbursement of first tranche ($750.00 million) of the Development Policy Financing from the World bank.

The Federal Government stated that it obtained $751.88million out of the recently approved $1.5billion loan by the World Bank.

The loan under the Nigeria Reforms for Economic Stabilisation to Enable Transformation, Development Policy Financing Programme project was disbursed on June 28, 2024.

This loan project is a part of the broader $2.25billion approved by the World Bank for Nigeria on June 13, 2024, to bolster Nigeria’s economic stability and support its vulnerable populations.

The $1.5billion loan comprises two separate agreements between Nigeria and the World Bank: An International Development Association credit of $750million, and an International Bank for Reconstruction and Development loan of $750million.

The amount disbursed includes the entire $750million from the IDA loan and $1.88million from the IBRD of the World Bank, with an undisbursed balance of $748.13million.

The reported $35.93 billion as of June 18, 2024 on the CBN’s website is lower to $36.89 billion declared by the apex bank’s governor, Mr. Olayemi Cardoso.

Cardoso recently stated that the country’s external reserve has increased to $36.89 billion as of July, 16 2024.

Cardoso, made this statement during an engagement with the Senate Committee on Banking, Insurance, and Other Financial Institutions,

He noted that the CBN’s monetary policies and actions have stimulated growth and stability in the nation’s economy.

According to him, the nation’s external reserves by the end of June, could finance over 11 months of imports for goods and services, or 14 months for goods alone.

Cardoso explained that this is significantly higher than the international benchmark of 3.0 months, indicating a strong buffer against external shocks.

He also noted that the banking sector remains robust and diverse, comprising 26 commercial banks, six merchant banks, and four non-interest banks.

He said, “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June indicating successful price discovery, increased market efficiency and reduced arbitrage opportunities.

“The stock of external reserves increased to 36.89 billion dollars as of July 16, compared with 33.22 billion dollars as at end-Dec 2023, driven largely by receipts from crude oil-related taxes and third-party receipts. In the first quarter of 2024, we maintained a current account surplus and saw improvements in our trade balance.”