CBN Gets More Firepower To Defend Naira As Foreign Reserves Record First Gain in 5 Months
legit.ngOct 16, 2023 9:57 AM

The Central Bank of Nigeria's foreign reserves have recorded their first gain in more than five months
This will come as a welcome development for the CBN as it fights to help the Naira recover in the foreign exchange market
Forex supply has always been a major reason the Naira has come under intense pressure in both the black and official markets
Nigeria's foreign exchange (forex) reserves have recorded the first increase in five months, significantly boosting the Central Bank of Nigeria's fight to help naira recover its lost value.


In a statement published on its website, CBN reinstated its commitment to intervene in the foreign exchange markets to increase liquidity and ease demand pressure on Naira.

Nigeria's Foreign reserves
Nigerian foreign reserves improves thanks to rising global oil prices. Photo credit: Presidency Source: Facebook
According to the Nation reports, forex reserves recorded a modest increase of $1.72 million over the weekend to close at $33.22 billion.

The report added this is the first accretion since May 19, 2023.


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The increase was due to the steady improvement in crude oil production and upbeat global oil prices.

Why are foreign reserves important?
Foreign reserves serve as a buffer to support the stability of the Nigerian currency in the international foreign exchange market.

When the CBN intervenes in the foreign exchange market, it uses its foreign reserves to influence the supply and demand of the Naira.


The foreign reserves also serve as a means to protect against external shocks and ensure the country's ability to meet its international obligations.

Trend in Nigerian foreign reserves
Nigeria's external reserves, which closed December 2022 at about $37.08 billion, had picked at $37.211 billion on January 16 2023.


It has since suffered a streak of extended losses, the latest being its five-month continuous decline since May.

Here is a breakdown of Nigeria's foreign reserves movement at the end of each month in 2023:

Month foreign reserves
January 31 $36.99 billion
February 27 $36.67 billion
March 31 $35.49 billion
April 28 $35.25 billion
May 30 $35.09 billion
June 30 $34.11 billion
July 28 $33.95 billion
August 31 $33.95 billion
September 28 $33.23 billion
Yemi Cardoso unveils his plans as CBN Governor, promises shift From Emefiele's Policies
Meanwhile, Legit.ng reported that Cardoso promised a policy shift in the future direction of the apex bank.

One of Cardoso's plans is to shift CBN's focus away from direct involvement in development finance initiatives, a hallmark of former Godwin Emefiele's leadership.

Source: Legit.ng

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