Nigeria’s external reserves have surged past the critical $45 billion mark, reaching a level not seen in six years and signalling a significant boost to the nation’s financial resilience, according to the latest data released by the Central Bank of Nigeria (CBN).
The figures show the country’s external reserves now stand at $45.04 billion, matching the last time they reached this high on 23 July 2019. This milestone reflects a remarkable turnaround, with the nation adding nearly $5 billion to its foreign exchange buffers in just a few months—a notable achievement amid global economic headwinds and widespread declines in reserves across many developing economies.
The reserves’ rapid ascent suggests a consistent and robust improvement in foreign exchange inflows, differentiating this from a temporary market spike.
The consistent buildup began gaining momentum in November:
Early November: Reserves stood at $43.26 billion.
Mid-November (Nov 18): Reserves climbed to $44.05 billion, indicating stronger inflows and easing pressure on the forex market.
Month-End: November closed at $44.67 billion, one of the highest month-end positions in recent memory.
This positive trajectory carried into December, culminating in the reserves crossing the $45 billion psychological and economic threshold on 4 December, demonstrating robust liquidity.
Analysts attribute the steady accumulation of reserves to improving inflows across multiple streams. “The consistent accumulation of reserves indicates improving inflows and a more resilient external position for the country,” one analyst noted.
Key contributors are believed to include:
Crude Oil Earnings: Stronger global oil prices and improved production figures.
Eurobond and Multilateral Financing: Inflows from recently executed Eurobond deals and financing from international institutions.
Higher reserves provide the CBN with greater leverage to intervene in the foreign exchange market if necessary, bolstering its capacity to manage volatility and help stabilize the local currency, the Naira.
The level of foreign exchange reserves is a critical barometer of a country’s external health, closely monitored by foreign portfolio investors (FPIs). Surpassing $45 billion significantly strengthens the CBN’s ability to manage future external obligations, finance imports, and withstand external shocks.
This position is expected to enhance investor confidence, potentially attracting more capital inflows into Nigeria’s equities and fixed-income markets.
Despite the reserves milestone, the Naira faced renewed pressure last week, closing at N1,454/$1 on Friday. This short-term volatility is largely attributed to the surge in festive-season demand. Importers, retailers, and consumers are driving heightened dollar demand ahead of the crucial Christmas and New Year activities.
Overall, the surpassing of the $45 billion mark not only underscores Nigeria’s improving external position but also reinforces its capacity to manage the inherent volatility of the foreign exchange market as investor sentiment strengthens.
