By Esther Agbo
Nigeria’s foreign exchange reserves have climbed to $34.7 billion, as per data from the Central Bank of Nigeria’s website on Sunday.
This marks a $110 million increase from the previous day’s figure of $34.5 billion.
Over the past week, the reserves have grown by $316 million since July 1.
This rise is attributed to several factors, including higher oil prices, improved diaspora remittances, and the Central Bank’s efforts to stabilise the currency.
Experts view this growth in foreign exchange reserves positively, highlighting its role in bolstering Nigeria’s economic resilience, as it provides a buffer against external shocks and helps the country meet its financial obligations.
Fitch Ratings recently upgraded Nigeria’s economic outlook to positive, citing significant reforms that have restored macroeconomic stability and improved policy coherence and credibility.
“The positive outlook partly reflects reforms over the last year, which have reduced distortions stemming from previous unconventional monetary and exchange rate policies,” Fitch noted.
The Central Bank has enacted several strategies to oversee the foreign exchange market, such as establishing the Investors’ and Exporters’ window. This initiative has encouraged foreign investment and bolstered reserves.
Consequently, these reforms have brought substantial inflows back into the official foreign exchange market and significantly increased foreign portfolio investments.
However, Fitch pointed out ongoing immediate hurdles, including elevated inflation rates and volatility in the FX market. Nonetheless, the agency anticipates additional measures for monetary policy tightening and enhancements in monetary policy transmission mechanisms.
According to Fitch, “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 stabilise, and the durability of the commitment to reform is to be tested.”