Nigeria’s external reserves are at an all-time high, thanks to the Central Bank of Nigeria’s regular additions rather than withdrawals. The Central Bank of Nigeria has added about $257 million in the last 20 days, bringing Nigeria’s reserves to over $39.79 billion. If Nigeria chose to repay its foreign loans, the country’s present foreign exchange reserves will suffice.
Following a $317 million billion decrease in March, the month of April is shaping up to be a comeback month for Nigerian external reserves. Foreign reserves grew by 0.61 percent, or $257.5 million, to $39.79 billion on April 20th, up from $39.5 billion at the start of the month, according to figures from the Central Bank of Nigeria.
A close review of CBN data reveals a 20-day streak of increases with no withdrawals.
The significance of reserves One of the CBN’s primary mandates is to use its monetary policy toolkits, which include currency intervention, to keep the naira’s exchange rate stable against other currencies.
To do so, the CBN will require ample reserves to meet the demands of importers and travelers. “Given inflows from the recently issued Eurobond and the IMF’s SDR, the CBN has enough supply to maintain the FX market in the medium term.”
They went on to say that foreign inflows are critical for maintaining FX liquidity in the longer term, given their estimate that reserve accretion will be slow due to low crude oil production levels.
A close review of CBN data reveals a 20-day streak of increases with no withdrawals.
Nigeria’s international debt Nigeria’s outstanding external debt was $38.3 billion at the end of 2021, according to data from the Debt Management Office (DMO).
Multilateral debt (World Bank, IMF, and others) owes the most money, at N18.65 billion, followed by commercial debt (from investors) at $14.66 billion. Debt between countries was $4.46 billion, with promissory notes totaling $600.64 million. Ex-CBN Chairman criticizes Emefiele’s decision to prohibit BDCs from selling foreign currency. Meanwhile, former Central Bank of Nigeria (CBN) deputy governor Obadiah Mailafia has slammed the apex bank’s decision to discontinue issuing foreign exchange to bureau de change operators.
The decision, according to Mailafia, might lower the naira’s value versus the dollar and other foreign currencies, as there may be a scarcity of cash. With his knowledge of the Nigerian banking system, Mailafia believes that banks may stockpile foreign currency and sell it at a premium price to buyers whenever they choose.
