Boost for the Naira as foreign reserves gain $262 million, highest in three weeks

After several weeks of depletion, Nigeria’s foreign exchange reserves have increased marginally by about $262 million in 19 days.

Data from the Central Bank of Nigeria (CBN) reveals an uptick in reserves, closing at $32.369 billion as of May 7, 2024, up from the $32.107 billion recorded in the previous month.

Nigeria’s reserves have experienced a steady decline from $34.45 billion in March 2024 due to falling oil prices, debt servicing, and other CBN obligations.

The decline in the reserves led to the speculations that the apex bank was defending the naira with reserves.

According to reports, the Nigerian FX reserves witnessed a decline of about $2 billion in April.

The CBN denied the reports that it was not intervening in the foreign exchange markets with the proceeds from the reserves.

Reserves reach three-week high

Reports say the FX reserves are currently at a 26-day high compared to the April 12, 2024, figure of N32.612 billion.

The country’s foreign reserves declined noticeably for over a month, beginning at $34.450 billion on March 18, 2024.

The reserves are the country’s firepower against the depreciation of the naira, which has dropped in value against the US dollar.

The naira has consistently depreciated against the US dollar and other major currencies in the last two weeks after emerging as the world’s best-performing currency in April.

As of Wednesday, May 8, 2024, the naira fell against the US dollar to trade at N1,441 per dollar as against the N1,403 it traded the previous day.

Analysts have attributed the fall to the CBN's failure to sell forex to Bureau de Change (BDC) operators in the past two weeks.

Nigeria’s external reserve falls by $2.16 billion

Legit.ng earlier reported that CBN data has disclosed that Nigeria's external reserves decreased by $2.16 billion during the previous month, reaching a seven-year low of $32.29 billion on April 15, 2024, from $34.45 billion on March 18, 2024.

The Nigerian currency, the naira, closed weaker at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, May 8, 2024.

Data from FMDQ Securities show that the naira crumbled to N1,421 per dollar in the official market, representing a 1.27% decline from the N1,403 per dollar it quoted the previous day.