Nigeria’s foreign exchange reserves have surged to $34.7 billion, as reported by the Central Bank of Nigeria (CBN). This marks a $110 million increase from the previous day’s reserve of $34.5 billion.
Over the past week, the reserves have seen a notable rise, totaling a gain of $316 million since July 1. This upward trend is driven by various factors, including higher oil prices, increased remittances from the diaspora, and the CBN’s strategic efforts to stabilize the naira.
Experts view this growth in foreign exchange reserves as a positive signal for Nigeria’s economy. A higher reserve level provides a buffer against external economic shocks and enhances the nation’s capacity to meet its financial commitments.
A recent report from Fitch Ratings has upgraded Nigeria’s economic outlook to positive, citing substantial reforms that have reinstated macroeconomic stability and improved policy coherence and credibility.
Fitch stated, “The positive outlook partly reflects reforms over the last year, which have reduced distortions stemming from previous unconventional monetary and exchange rate policies.”
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The Central Bank of Nigeria has introduced several measures to manage the foreign exchange market effectively. One significant initiative is the Investors’ and Exporters’ window, which has attracted foreign investments and boosted the reserves.
These reforms have led to significant inflows into the official foreign exchange market and a marked increase in foreign portfolio investments.
Despite the positive developments, Fitch notes that short-term challenges persist. High inflation and volatility in the FX market remain concerns. However, the agency anticipates further monetary policy tightening and improvements in policy implementation.
Fitch emphasized, “The reforms have contributed to the restoration of macroeconomic stability and enhanced policy coherence and credibility. However, we see significant short-term challenges, notably high inflation, and the FX market has yet to stabilize. The durability of the commitment to reform is to be tested.”