Big Boost for Naira as External Reserves Rise by Over $300m First 10 Days of June

• The CBN has revealed that foreign reserves have increased significantly in the first ten days of June
• The rise in FX reserves will give CBN more firepower to intervene in the forex market and ensure naira exchange rate stability
• Dollar supply has always been a major reason for naira depreciation due to demand pressure from companies and travellers

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Nigeria's foreign exchange (forex) reserves have significantly increased in the first ten days of June 2024.

Data from the Central Bank of Nigeria showed that the foreign reserves have increased to $33.08 billion as of Monday, June 10, 2024.

The latest foreign reserves balance is $387.18 million or a 1.18% improvement compared to the $32.69bn the reserves stood at the end of May 2024.

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The boost in Nigeria's reserves is due to $925 million received from the African Export-Import Bank (Afreximbank) as part of the $3.3 billion crude oil-backed prepayment loan agreement with the Nigerian National Petroleum Company (NNPC) Limited.

Why are foreign reserves important?

Foreign reserves serve as a buffer to support the stability of the Nigerian currency in the international foreign exchange market.

When the CBN intervenes in the foreign exchange market, it uses its foreign reserves to influence the supply and demand of the naira.

The foreign reserves also serve as a means to protect against external shocks and ensure the country's ability to meet its international obligations.

The increase in reserves means that the CBN now has the firepower to intervene in the foreign exchange markets and reduce the pressure of demand for dollars.

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Already, there is a slight improvement in the naira's performance in the foreign exchange market, and it is expected to continue.

On Tuesday, June 11, the naira appreciated to N1473.66 in the official market from N1483.62 a day earlier.

FG addresses Naira to dollar exchange rate

Legit.ng earlier reported that Ben Akabueze, the director-general of the federation's budget office, said the Naira would strengthen in value in the foreign exchange market in 2024.

Akabueze said this would be possible as the country expects an increase in dollar supply.

He noted that the Tinubu-led government expects the reforms to start yielding results in 2024, which is why it maintains a positive stance on the exchange rate.

Source: Legit.ng