As of Sunday, Nigeria’s foreign exchange reserves have reached a noteworthy milestone of $34.7 billion, as reported by the Central Bank of Nigeria’s official website.
The amount has gone up by $110m since the $34.5bn recorded
the day prior.
The reserves have been experiencing a consistent upward
trend over the past week, resulting in a substantial cumulative increase of
$316 million since July 1.
The recent surge in economic growth can be attributed to
various contributing factors. Notably, the rise in global oil prices, the
influx of remittances from expatriates, and the Central Bank’s effective
currency stabilization measures have all played significant roles in driving
this positive trend.
In the opinion of experts, the growth in foreign exchange
reserves is a favorable development for the Nigerian economy. It serves as a
buffer against external disruptions and bolsters the nation’s capacity to meet
its financial commitments.
In a recent statement, Fitch highlighted the positive
outlook for the economy, attributing it in part to the successful
implementation of reforms over the past year. These reforms have effectively
addressed distortions arising from unconventional monetary and exchange rate
policies previously employed.
Fitch said, “The positive outlook is partly attributed to
the reforms implemented over the past year, which have effectively mitigated
distortions arising from prior unconventional monetary and exchange rate
policies.”
The Central Bank has implemented several measures to
effectively manage the foreign exchange market. Notably, the introduction of
the Investors’ and Exporters’ window has been instrumental in attracting
foreign investment and bolstering reserves.
The implemented reforms have resulted in a substantial
increase in foreign exchange inflows to the official market and a significant
surge in foreign portfolio investment inflows.
Nevertheless, Fitch noted that short-term challenges
persist, including elevated inflation and foreign exchange market volatility.
Despite these factors, the agency anticipates further monetary policy
tightening and reinforcement of monetary policy transmission.
“The implemented reforms have facilitated the
reestablishment of macroeconomic stability, resulting in improved policy
coherence and enhanced credibility.
“Nevertheless, we observe substantial short-term obstacles,
particularly elevated inflation rates. Furthermore, the foreign exchange market
has not yet achieved stability, and the longevity of the commitment to reform
remains to be evaluated,” Fitch affirmed.