Nigeria’s external reserves have seen a 0.29% YTD increase in January 2024, reaching $33.113 billion after Afreximbank’s $2.25 billion crude oil prepayment facility disbursement, as reported by the Central Bank of Nigeria (CBN). Analysts at CardinalStone anticipate enhanced foreign exchange (FX) liquidity, fostering increased foreign investments throughout the year.
The recent acquisition of the $2.25 billion FX support facility from the African Export-Import Bank (AFREXIM) has contributed to this positive outlook, along with expected inflows from the World Bank and NLNG dividend proceeds. Analysts believe that these factors, coupled with the CBN’s commitment to clearing outstanding backlogs, position Nigeria for a boost in dollar inflows and overall FX liquidity.
Despite a drop in liquidity at the official foreign exchange market on Monday, the naira appreciated by 6.14% against the dollar. Dollar flows decreased by 69.28%, falling from $85.85 million on Friday to $26.37 million on Monday. The naira’s resilience was evident as it closed at N838.95 compared to N890.54 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to FMDQ data.
Market experts are closely watching the market’s response to these measures and private sector initiatives, including the ongoing efforts by the CBN and projects like the Dangote Refinery. With the global economic landscape predicting lower interest rates in 2024, these collective endeavors are expected to contribute to positive outcomes for Nigeria’s economic landscape in the coming year.
The Central Bank of Nigeria emphasizes the critical role of foreign exchange reserves as essential assets supporting liabilities and shaping monetary policy. These reserves, including foreign banknotes, deposits, bonds, treasury bills, and various foreign government securities, serve as a multifaceted tool with significant implications for economic stability.
Analysts and industry leaders, including Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, express optimism about the Afreximbank fund, anticipating its crucial role in enhancing market stability and addressing existing challenges in Nigeria’s financial landscape.