Emmanuel OchayiNigeria’s foreign exchange (FX) reserves have shown a notable increase over the past six days, indicating a potential recovery for the economy’s external reserves.
According to data from the Central Bank of Nigeria (CBN), accessed on Sunday, the reserve stood at $32.80 billion on June 6, 2024, up from $32.69 billion on May 31.
CBN data highlights a steady rise in the reserves: from $32.74 billion on June 3, to $32.77 billion on June 4, then to $32.79 billion on June 5, before reaching the current figure. This upward trend is significant for Nigeria, which faced a $1.8 billion dip in reserves between March 18 and May 29, 2024.
“The increase in our FX reserves is a positive sign for the economy,” said Emmanuel Okon, a financial analyst in Lagos. “It suggests that we are moving in the right direction after the recent challenges.”
The foreign exchange reserve is crucial for Nigeria’s economic stability, serving as a buffer against economic shocks and ensuring the country can meet its international obligations. The recent rise in reserves, has come alongside improvements in the naira’s performance.
READ ALSO: How FX Gain Now Major Source Of FAAC Revenue – Report
Late March saw the naira rebounding against the US dollar, in both official and parallel markets. The local currency made notable gains against the dollar in the black market. This improvement, followed the Central Bank of Nigeria’s announcement of the final settlements of all valid foreign exchange backlogs. Mr. Olayemi Cardoso, the CBN Governor, had promised to address an inherited backlog of $7 billion in claims, a pledge that has now been fulfilled.
“The fulfillment of this promise by the CBN has boosted confidence in the market,” said Tolu Adedoyin, an economist. “Clearing the FX backlog was critical to stabilising the naira and restoring faith among investors.”
The recent rise in FX reserves also has broader implications for Nigeria’s economic health. By strengthening the reserves, Nigeria can better withstand external economic pressures and foster a more stable economic environment. This, in turn, supports investor confidence and can drive economic growth.
A senior official at the Central Bank commented, “We are committed to ensuring the stability of our FX reserves and will continue to take measures to strengthen our economic position.”
While the increase in the reserves is a welcome development, experts caution that continued vigilance and strategic economic policies, are necessary to maintain and build on these gains.
“The path to recovery is still long, but these developments show that with the right policies, we can achieve economic stability,” said Dr. Chinedu Ugo, an economic consultant.
As Nigeria navigates its economic challenges, the upward trend in FX reserves provides a glimmer of hope. Maintaining this momentum will be key to securing a stable and prosperous economic future for the country.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
