Nigeria’s external reserves hit two year high as economy moves to rebound from downturn

shakirudeen taiwo

August 10, 2017 7:41 AM

An external reserve of $31.2 billion is the highest since the beginning of President Buhari's administration.

The recovery of Nigerias economic is looking real after the countrys external reserves hit its highest level since 2015.

The Central Bank of Nigeria (CBN) statistics shows an the ER surged to $31.2 billion as at August 8, 2017. This is the highest level it has gotten since July 2015, as Nigeria battles to exit its first economic recession in the last 25 years.

Aside from external reserves, other macroeconomic indices have improved on truce agreement between the government and Niger Delta militants.

This has triggered high oil production and investors' confidence.

Also Read: Nigeria’s Central Bank infamous FX policy achieving results

From the CBN’s statistics, the country’s ER crashed to $25 billion in Q2 2016 from about $40 billion in Q1 2014. This triggered a first round devaluation of the Naira, amid a crash in global oil price and investors’ exiting the Nigeria’s capital market.

Against the backdrop, Nigeria’s ability to meet its $10 billion monthly import bills and $30 billion IMF benchmark were threatened.

Also with gradual rebounds in oil prices and output, Nigeria’s foreign earnings from oil export increased. Thus, leading to increase in government revenue and reserves.

The CBN also introduced multiple exchange rate windows stabilize the FX market.

Frontier economies like Nigeria rely on external reserves to achieve their macroeconomic goals. It also allows for stable forex market and attracts more foreign investments.