Nigeria’s external reserves have hit a 22-month high, reaching $37.31 billion as of September 18, 2024, marking a significant recovery in the country’s foreign currency position. This level is the highest since November 4, 2022, when reserves stood at $37.36 billion, according to data from the Central Bank of Nigeria (CBN).

Despite this improvement, the surge in reserves has not yet translated into a positive impact on the naira, which Bloomberg ranked among the 10 worst-performing currencies globally on September 20, 2024. The external reserves, which represent Nigeria’s stock of foreign currency, are essential for meeting international financial obligations and stabilizing the local currency.

On a year-to-date basis, the country’s reserves increased by 12.99%, or $4.29 billion, up from $33.02 billion recorded on January 2, 2024. A year-on-year comparison shows a 12% growth, adding $4.03 billion to the reserves since September 18, 2023, when they stood at $33.28 billion.

Key drivers of the increase include the federal government’s domestic dollar bond issuances, which raised over $900 million through a $500 million issuance as part of the first series of a $2 billion domestic US dollar bond program. Additionally, remittance inflows from Nigerians abroad contributed $553 million between July 2023 and July 2024. Further inflows were supported by multilateral loans such as the $3.3 billion AfreximBank oil facility and $2.25 billion from the World Bank Group.

Foreign exchange inflows into Nigeria’s economy surged by 57% over the past year due to consistent policies by the CBN. In February 2024 alone, the country recorded $8.86 billion in foreign exchange inflows, compared to $5.66 billion in February 2023.

CBN’s economic report for February 2024 showed a rise in new investments, totaling $1.24 billion, up from $0.33 billion in January 2024. Foreign direct investment increased to $0.06 billion from $0.03 billion the previous month, while portfolio investment inflows grew to $0.80 billion from $0.12 billion. Other investment capital, primarily loans, also saw an uptick, rising to $0.37 billion from $0.18 billion.

The steady increase in Nigeria’s reserves reflects positive trends in foreign inflows, but challenges remain in stabilizing the local currency amid global economic pressures.