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Nigeria’s foreign exchange reserves have surged to $34.14 billion, reflecting a 4.06% increase from $32.74 billion on June 3, 2024, according to data from the Central Bank of Nigeria (CBN).
This growth in reserves is largely attributed to recent loans obtained by the Federal Government from the World Bank. In May, the Bureau of Public Enterprises announced that the Federal Government had secured a $500 million World Bank loan to enhance the country’s electricity distribution sector. Additionally, the World Bank pledged $2.25 billion to help stabilize Nigeria’s economy.
“This combined $2.25 billion package provides immediate financial and technical support to Nigeria’s urgent efforts to stabilize the economy and scale up support to the poor and most economically at risk. It further supports Nigeria’s ambitious, multi-year effort to raise non-oil revenues and safeguard oil revenues to promote fiscal sustainability and provide sufficient resources to deliver quality public services,” stated the World Bank.
As a result, Nigeria’s external reserves have increased by over $1 billion within a month.
Last year, Nigeria faced a severe dollar shortage, prompting the central bank to float the naira to boost foreign exchange inflow. Consequently, the local currency depreciated by over 300% in one year, reaching 1,514.31 per dollar at the Nigerian Autonomous Foreign Exchange market on Friday.
According to a Bloomberg report, the naira was the worst-performing currency globally in the first half of 2024. The report highlighted that devaluation, insufficient dollar liquidity, and market volatility impeded efforts by the Central Bank of Nigeria to strengthen the currency. Besides the naira, Egypt’s pound and Ghana’s cedi were also among the world’s worst-performing currencies in the first six months of the year.
“The naira’s performance is the worst among global currencies tracked by Bloomberg, except for Lebanon’s pound, which is undergoing an economic crisis and experiencing dollarization,” noted the report.
CBN Governor Olayemi Cardoso expressed cautious optimism regarding the stabilization of the naira. “I do believe that we have more or less seen the worst in terms of volatility,” Cardoso told Bloomberg TV.
The central bank has implemented various measures to improve dollar supply and stabilize the local currency. Last week, the CBN announced that International Money Transfer Operators (IMTOs) could now access the official window to sell forex. This move is aimed at enabling IMTOs to access naira liquidity at the official window, thereby facilitating timely settlement of diaspora remittances.
In January, the CBN barred banks and fintech companies from providing international money transfer services. In February, it resumed the sale of dollars to bureau de change operators to enhance liquidity in the retail forex market, allocating $20,000 to each eligible BDC operator.
Previously, on July 27, 2021, the CBN had halted foreign exchange sales to BDCs, accusing them of trading FX in amounts greater than $5,000, violating their licenses and Nigeria’s FX regulations.
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