By Oludare Mayowa
Nigeria’s foreign exchange reserves rose 10.37 percent month-on-month to $38.18 billion by October 7, 2021 from $34.59 billion in the same period of last month, data sourced from the Central Bank of Nigeria (CBN) website on Monday has shown.
The data also showed that the country’s dollar buffer climbed 6.85 percent from $35.73 billion over a year ago.
On year to date basis, the dollar reserves grew by 7.12 percent from $35.64 billion on January 4, 2021.
Analysts attributed the sharp growth in the nation’s foreign exchange buffer to the inflow of the recent Eurobond issuance by the government.
Nigeria had last month issued $4 billion Eurobonds in three tranches in a bid to finance the 2021 budget deficits.
Before now, the dollar reserves for the country have consistently declined due to low acreation from oil exports earnings and other sources.
Analysts also attributed the recovery in the nation’s forex reserves to improve foreign exchange inflows due to global oil price recovery.
A plunge in oil prices had eaten into Nigeria’s foreign reserves, forcing the CBN to introduce currency controls, which has frustrated businesses and caused the economy to contract.
Brent Crude rose 1.32 percent on Monday to $83.48 per barrel, a positive development that could also impact on the Nigeria’s forex reserves.
Nigeria depend largely on revenue from crude oil exports to boost it forex reserves and support the local currency.
Industry observers are also expecting a positive impact of the increase in the reserves on the domestic foreign exchange market.
On Friday, the naira appreciated by 0.09 percent as the dollar was quoted at N414.30 as against the last close of N414.67 on the official Investors and Exporters (I&E) forex window.
At the black market the naira is trading between N575-N580 to the dollar depending on the location in Lagos and Abuja, sources said.