Market News

Nigeria foreign exchange (forex) reserves hit $40.16 billion last week, driven by rising forex inflows and marginal increase in crude oil output.

According to the latest figures published by the Central Bank of Nigeria (CBN), the gross external reserves stood at $37.934 billion on April 30 and reached $38.298 billion by May 14, and have continued to rise to present status.

Nigeria’s oil output rose 0.67 per cent in July to 1.51 million barrel per day (mbpd), meeting OPEC+’s 1.5 mbpd quota for the third time this year. Although, production still falls below the 2025 benchmark target of 2.06 mbpd, a slight increase is anticipated in August, and higher contributions to the reserves are expected.

Part of the reserves accretion was triggered by the forex reforms, instituted by the Olayemi Cardoso-led Central Bank of Nigeria (CBN),  new policies instituted by the Federal Government to boost local production, reduce forex demand pressure, and lessen domestic prices have been instrumental to macroeconomic stability.

The expectations are that the apex bank sustains the forex reforms while the fiscal authority strengthens efforts at enhancing forex earnings, especially from gas, oil and non-oil exports.

The CBN under Cardoso is cultivating multiple FX sources to increase dollar inflows, boost dollar access to manufacturers and retail end users. 

From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorized dealers and other players in the value chain.

The move has led to substantial accretion to the gross FX reserves and supported the stability of the naira.

Given that FX inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN under Cardoso puts in a lot of efforts in attracting more inflows into the economy.

Diaspora remittances to Nigeria, estimated at $23 billion annually remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming.

The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.

The remittances in the economy is expected to increase based on  CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.

Director of Trading at Verto, Charlie Bird, said dollar liquidity dynamic is now more balanced, with foreign investors and airlines able to repatriate funds.

Speaking during Cordros Asset Management seminar titled: “The Naira Playbook”, he said Nigeria is now darling of foreign investors because of improved dollar liquidity in the economy due to positive CBN’s reforms