Big Boost for Naira As Nigeria’s Foreign Reserves Rise by $490m after FG's Action

• The Central Bank of Nigeria has announced that Nigeria's foreign reserves have recorded an increase
• This comes following the successful $500 million dollar bond issuance, which signifies investor confidence
• The increase will come as a welcome development for the CBN as it fights to help the naira recover in the foreign exchange market

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 recorded a $490 million increase, boosting the Central Bank of Nigeria's fight to help the naira recover its lost value.

The increase follows the successful issuance of domestic dollar bonds by the Debt Management Office (DMO).

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According to data from the CBN, foreign currency reserves surged to $36.73 billion as of September 10, 2024, up from $36.24 billion recorded on September 2, 2024.

Domestic bond issuance

The successful bond issuance saw the Federal Government raise over $900 million from investors, marking it as a highly subscribed offering, with subscriptions exceeding 1805.

Despite global economic challenges, this achievement underscores growing investor confidence in Nigeria’s economic prospects.

Minister Wale Edun highlighted the strategic importance of bond issuance in stabilising the exchange rate, managing inflation, and potentially reducing interest rates.

He emphasised that these measures are part of broader macroeconomic reforms to foster economic stability and enhance investor confidence.

Edun stated:

“This historic issuance will provide essential foreign exchange liquidity and boost reserves, which will help stabilize the exchange rate, manage inflation, and eventually lower interest rates. It will also lay the foundation for increased investment by both domestic and foreign investors."

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Naira impact as dollar reserves rise

On Wednesday, the Nigerian naira recorded a 5.06% gain against the US dollar. This followed an increase in dollar supply, totalling $221.24 million in a single trading day.

According to FMDQ Securities Exchange Limited data, the naira was quoted at N1,558.75 per dollar, compared to N1,637.59 the previous day at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

Foreign reserves gain $262 million

Legit.ng earlier reported that after several weeks of depletion, Nigeria’s foreign exchange reserves had increased marginally by about $262 million in 19 days.

Data from the Central Bank of Nigeria (CBN) revealed an uptick in reserves, closing at $32.369 billion as of May 7, 2024, up from the $32.107 billion recorded in the previous month.

Nigeria’s reserves have experienced a steady decline from $34.45 billion in March 2024 due to falling oil prices, debt servicing, and other CBN obligations.

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Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng