Reloaded News Desk
Nigeria’s foreign exchange reserves have risen to $55.25 billion, their highest level in 18 years, according to the Central Bank of Nigeria.
The latest figure was disclosed alongside the outcome of the CBN’s 307th Monetary Policy Committee meeting, at which the bank cut its Monetary Policy Rate from 26.5 per cent to 23 per cent.
The increase in reserves points to stronger external balances and provides the country with a larger buffer against external shocks affecting the foreign exchange market.
The CBN said the improvement in external conditions was among the developments considered by the Monetary Policy Committee in its latest decision.
The reserves position is particularly significant for Nigeria because the availability of foreign exchange affects importers, manufacturers, investors and businesses that depend on imported raw materials, machinery and other inputs.
The naira also strengthened at the official foreign exchange market on Tuesday, trading at about ₦1,327.78 to the dollar, compared with ₦1,329.80 on Monday.
However, higher reserves alone do not eliminate the structural pressures on Nigeria’s foreign exchange market.
The durability of the improvement will depend on factors including oil earnings, capital inflows, external obligations, import demand and the CBN’s management of the foreign exchange market.
For businesses, the immediate significance is whether stronger external reserves and improved FX conditions will translate into greater stability and predictability in accessing foreign exchange.
Reloaded News — NEWS THAT INFORMS. MEDIA THAT TRANSFORMS
