Olufemi Adeyemi 

Nigeria's external reserves have reached a 22-month peak of $37.31 billion, indicating a substantial influx of foreign capital into the nation's economy. According to data from the Central Bank of Nigeria (CBN), as of September 18, 2024, the reserves have achieved their highest level since November 4, 2022, when they were recorded at $37.36 billion. This development signifies a significant rebound in Nigeria's foreign currency reserves.

The external reserves reflect the country's holdings of foreign currency, yet they have not effectively countered the declining value of the naira, which Bloomberg identified as one of the ten worst-performing currencies globally on September 20. These reserves are essential for assessing Nigeria's capacity to fulfill international financial commitments and to stabilize the domestic currency.

Year-to-date, the reserves have increased by 12.99 percent, or $4.29 billion, from the $33.02 billion noted at the beginning of the year on January 2, 2024. Several factors have driven this rise in external reserves, including the federal government's domestic dollar bonds that attracted foreign investments, remittances from Nigerians living abroad, multilateral loans from international organizations, and foreign portfolio investments.

In a year-on-year comparison, Nigeria's foreign reserves have grown by 12 percent, adding $4.03 billion to the $33.28 billion recorded on September 18, 2023. The federal government successfully raised over $900 million from investors through the issuance of $500 million, the first tranche of a $2 billion domestic US dollar bond aimed at economic stabilization. 

Additionally, the CBN reported $553 million in remittances over the year from July 2023 to July 2024. Other significant inflows during this period included a $3.3 billion oil facility from AfreximBank and $2.25 billion from the World Bank Group.

Foreign exchange inflows into the economy experienced a remarkable increase of 57 percent over the past year, attributed to the consistent policies implemented by the Central Bank of Nigeria (CBN).

According to data released by the CBN, the country achieved $8.86 billion in foreign exchange inflows in February 2024, a significant rise from $5.66 billion during the same month in February 2023.

The CBN's economic report for February 2024 highlighted a substantial growth in new investments, which reached $1.24 billion, compared to $0.33 billion in January 2024.

Foreign direct investment inflows rose to $0.06 billion, up from $0.03 billion in the previous month. Additionally, portfolio investment inflows surged to $0.80 billion from $0.12 billion, driven by increasing returns on money market instruments and bonds. Furthermore, other investment capital, primarily in the form of loans, increased to $0.37 billion, up from $0.18 billion in the prior period.