The Nigerian naira soared to its strongest level in nearly a month, climbing 0.6% to ₦1,530 against the US dollar after the Central Bank revealed a significant surge in foreign-exchange reserves.
The country’s net reserves hit a three-year high of $23 billion in December, a nearly sixfold increase from the previous year.
This increase followed the bank’s efforts to reduce liabilities, such as swaps and forward obligations, to restore market confidence.
Restoring Confidence In The Market
This was the first time since 2023 that the CBN had released such figures, a year when doubts about Nigeria’s reserves were raised.
In August 2023, the central bank’s large transactions with JPMorgan Chase & Co. and Goldman Sachs, involving foreign-currency pledges to support government revenue, had cast doubt on the true state of the reserves.
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Projections For Continued Growth
By March 27, Nigeria’s gross reserves had risen to $38.33 billion, according to Bloomberg.
The CBN expressed hope that the strengthened reserves would rebuild confidence in the foreign-exchange market, with projections for continued growth driven by improved oil production and stronger export conditions.
Challenges Ahead For The Naira
Despite the recent gains, the naira has lost about 70% of its value against the dollar since June 2023, following President Bola Tinubu’s reforms aimed at attracting foreign investment.
While there are signs of recovery, challenges remain for the currency.
