Nigeria’s external reserves surpass one-year high

The external reserves of Nigeria have hit the highest point in more than a year, rising by about $3 billion in less than three months to $35.02 billion on Monday, data from the central bank shows.

The reserves have been on the rise in recent months after dropping to a low of $32.1 billion in April from $35.09 billion on May 30, 2024, a day after President Bola Tinubu took office.

Crude oil sales, foreign remittances, foreign currency loans, and yields from foreign assets are among the sources of inflows to the external reserves. 

Analysts at CSL Stockbrokers pointed out in a recent note that the external reserves declined by $2.28 billion between March 18 and April 19. 

“Oil prices have been high in recent years, influenced by the impact of the Russia-Ukraine crisis on the global energy market. However, Nigeria has failed to fully benefit from this due to declining production figures caused by crude oil theft and deteriorating oil infrastructure,” they said.

Foreign exchange pressures persist in the country despite measures taken by the Tinubu government including forex rate unification across various windows, according to the analysts.

“In our view, without urgent structural reforms on the fiscal front to augment FX supply, the country’s reserves will likely be pressured for the rest of the year despite the slight increase observed,” they said.