Nigeria’s external reserves improve, hit $33.72bn in February

Nigeria s external reserves

The external reserves of Africa’s biggest economy recorded an improvement in February as the figure closed at $33.72 billion on the last day of the month.

Data sourced from the Central Bank of Nigeria showed that the nation’s FX reserves improved further as gross reserve level increased by $200.45 million w/w to $33.72 billion (29 February).

Also, the naira appreciated by 7.6 percent to N1, 548.25/$ at the Nigerian Autonomous Foreign Exchange Market.

Last week, the CBN commenced the weekly sale of $20,000.00 to each of the 1,368 eligible BDCs with allowable spread capped at 1.0 percent of the purchase price.

At the NAFEM, total turnover (as of 29 February 2024) declined by 16.3 percent week -to -date to $787.28 million, with trades consummated within the N1,300.00 – N1,778.25/$ band.

In the forwards market, the naira appreciated at the 1-month (+0.1% to NGN1, 581.73/$) contract, but depreciated at the 3-month (-0.2% to NGN1, 621.98/$), 6-month (-0.3% to NGN1, 678.95/$) and 1-year (-0.5% to NGN1, 803.18/$) contracts.

As part of measures to boost Nigeria’s ailing foreign exchange market, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, said that foreign exchange backlogs have been cleared in all the banks except for five of them.

Cardoso said this on Thursday during an investor call facilitated by the Nigerian Exchange Group, during which he said that the remainder of the banks’ FX backlogs would be cleared in the next few days.

The CBN governor stated, “Basically, what we have done with those is that we have paid as much as we can to the point where we have cleared the backlog of all the banks save five. All the banks’ genuine and verifiable backlogs have been cleared, save five.

“Also, the naira appreciated by 7.6 percent to N1, 548.25/$ at the Nigerian Autonomous Foreign Exchange Market.”

“We are confident that we will shortly be in a position where the whole issue of forwards would be behind us. I would say in the next few days we should be in a position where the balance of the five would have been put behind us.

“I have tried as much as possible to be consistent on this matter. I don’t make promises I don’t fulfill. The last time I spoke on this matter, I was confident that within one month, we would be more or less out of it and I’m saying again that right now, I think in the course of the next few days, maybe a week and a half, this should be put behind us.”

The apex bank governor also revealed that Nigeria had attracted $2bn in foreign portfolio inflows this year.

According to the National Bureau of Statistics, Nigeria recorded a total of $3bn in foreign portfolio inflows in 2023.

In an interview in early February, Cardoso had revealed that about $2.4bn of the $7bn foreign exchange backlog he met when he got into office were from non-existing entities, and requests without import documents among other infractions.

“We discovered that of the roughly $7bn, about $2.4bn had issues. We believed that they had no business being there. The infractions ranged from so many things. For example, not having valid import documents and in some cases entities that did not exist and in some cases, account parties who had asked for foreign exchange and got more than they asked for and some that didn’t even ask for any and got. There were a whole load of infractions there.

“Notwithstanding the recent policy actions by the CBN, the currency has remained under pressure given that the market supply remains frail. We are encouraged by the pace of reforms within the market as well as the renewed interventions by the apex bank. In our view, (1) following through with recently implemented reforms alongside (2) continued efforts to clear the FX backlog may lead to improved liquidity over the medium-term,” he said.