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Nigeria’s Foreign Exchange Reserves Hit $34.7 Billion

Nigeria’s Foreign Exchange (FX) reserves climbed to a peak of $34.7 billion based on figures from the Central Bank of Nigeria’s website.

Naija News reports that this marks a rise of $110 million from the day before, which stood at $34.5 billion.

Over the last seven days, the reserves have been on the rise, accumulating an increase of $316 million since July 1.

This surge can be attributed to various reasons, such as the recent uptick in oil prices, better remittances from the diaspora, and the Central Bank’s initiatives to stabilize the local currency.

Analysts see this rise in international currency holdings as beneficial for Nigeria’s economy, as it offers protection against external disturbances and bolsters the nation’s capacity to fulfil its financial commitments.

A recent assessment by Fitch Ratings has given a favourable outlook to Nigeria’s economic situation, highlighting major reforms that have brought back macroeconomic stability and improved the consistency and reliability of its policies.

Fitch said, “The positive outlook partly reflects reforms over the last year, which have reduced distortions stemming from previous unconventional monetary and exchange rate policies.”

The introduction of the Investors’ and Exporters’ window by the Central Bank has successfully attracted foreign investment and boosted reserves, leading to a significant increase in foreign portfolio investment inflows to the official foreign exchange market.

Nevertheless, Fitch has highlighted ongoing short-term challenges such as high inflation and FX market volatility. Despite these challenges, the agency anticipates additional monetary policy tightening and an improvement in monetary policy transmission.

“The reforms have contributed to the restoration of macroeconomic stability and enhanced policy coherence and credibility.

“However, we see significant short-term challenges, notably high inflation, and the FX market has yet to stabilize, and the durability of the commitment to reform is to be tested,” Fitch stated.

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