Nigeria’s FX reserves hit $40bn, highest in nearly 3 years

Nigeria’s foreign exchange reserves have surged to over $40 billion, marking their highest level in almost three years, Central Bank Governor Olayemi Cardoso announced Thursday. The milestone was revealed during a symposium in Abuja that celebrated his team’s first year in office.

During the event, which featured the launch of a report titled “Promoting Stability in an Era of Economic Reforms: The Journey So Far,” Cardoso highlighted significant economic improvements under his leadership.

According to the official statement released Thursday: “According to Governor Cardoso, the reforms had started to yield positive results, including marked improvements in the FX market and a stabilisation of foreign reserves, which have now surpassed the $ 40 billion mark, the highest in 33 months. “While noting that inflation remained elevated, he said it was on a downward trend, signalling that the reforms were taking hold in restoring market equilibrium and fostering growth.”

The Central Bank has implemented aggressive measures to combat inflation and stabilize the economy. These include raising the Monetary Policy Rate by 850 basis points to 27.25% and increasing the Cash Reserve Ratio for commercial banks to 50%.

A key reform involved streamlining Nigeria’s foreign exchange system by eliminating multiple exchange rates. This change addressed delayed foreign exchange settlements and prevented revenue losses that had reached 6.2 trillion naira in 2022. The previous system had created arbitrage opportunities and discouraged foreign investment.

Looking ahead, the Central Bank aims to boost monthly foreign remittances to $1 billion, a target Cardoso sees as crucial for strengthening Nigeria’s foreign reserves and economic stability. To support these objectives, new operational guidelines have been established for Bureau de Change operators to better regulate the foreign exchange market.

The reforms come as part of a broader strategy to address Nigeria’s decade-long challenges with declining foreign direct investment and portfolio investments.