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Home Currencies

Nigeria’s Foreign Reserves Will Surpass the $42 billion Threshold

Rate Captain by Rate Captain
November 11, 2021
in Currencies, Economics, Money Market
Reading Time: 2 mins read
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Nigerian Naira notes on a Spreadsheet data report

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The Central Bank Governor, Godwin Emefiele, assured Nigerians that the foreign reserves statistics will surpass the $42 billion threshold by the middle of next year.

During the France-Nigeria Security and Economic Summit on Wednesday, which was hosted in Paris, Emefiele analyzed Nigeria’s external reserve expectations and macroeconomic factors driving the economic ramifications of FX reserve in the economy.

According to him, “Nigeria’s external reserves are expected to surpass US$42 billion by mid-2022. This is due to the sustained increase in crude oil price, the impact of Eurobond Issuance, and the stable exchange rate condition.”

The reserves, which stood at $34.80 billion in the first quarter of 2021, declined to $33.3 billion in the second quarter, before rising to $36.7 billion in the third quarter. It is estimated to hit about $41.82 at the end of this quarter.

The governor added “Nigeria’s FX reserves has increased to over US$40bn from about US$33.4bn in March 2020 due to inflows from the IMF, Eurobond proceeds, and complemented by CBN’s astute management of the foreign exchange market,” 

The CBN Governor stated that the average turnover fell to an estimated $44.1 million during the vertex point of the COVID-19 pandemic in the second quarter of 2020.

He further stated that turnover at the Investors and Exporters Window averaged $157. 4 million in the third quarter and is projected to hit $209.3 million at the close of the year.

In his words,” The exchange rate continued to experience significant pressure in the various windows. Accordingly, the CBN adjusted the official exchange rate from N306/US$ to N405/US$. Today, the exchange rate at the I&E is hovering around N412/US$1.”

Mr. Emefiele also explained the implications of the CBN policies on Gross Domestic Product (GDP) and Inflation as they affect the economy. He noted that economic recovery is sustainable, as inflation continues to take a downward sloping trend line.

He said, “GDP: GDP rebounded with a strong positive growth of 5.1% percent in the 2nd quarter of 2021 from negative growth of -6.1% in the 2nd quarter of 2020. The recovery path has continued to strengthen in 2021 as a result of the stimulus support provided by our various policies and interventions.

“Headline inflation rate decreased to 17.01 percent in August 2021 from 18.17 percent in March 2021, and we are increasing our efforts to control inflation towards the CBN’s single-digit tolerance range.”

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