The Governor of the Central Bank of Nigeria, Yemi Cardoso, has announced that Nigeria’s foreign reserves have risen to $39.12 billion as of October 11, 2024, marking a 12.74 percent increase from $34.70 billion at the end of June 2024.
Cardoso stated this while addressing the House of Representatives Committee on Banking on policy measures and strategies to address macroeconomic challenges. The governor attributed this growth primarily to foreign capital inflows and receipts from crude oil-related taxes and third parties.
On the macroeconomic performance in 2024, he said projections indicate a growth rate of 3.2% and 3.3% for 2024 and 2025 respectively. He added that Nigeria is projected to maintain a more robust 4.3% growth rate.
The governor also highlighted that the substantial inflows were driven by remittances, which now account for 9.4% of the total external reserves. These inflows have significantly contributed to the financial buffer that provides Nigeria with protection against global economic volatility. Cardoso noted that the current external reserve position can finance over 12 months of import of goods and services, or 15 months of goods only. “This is substantially higher than the prescribed international benchmark of 3.0 months, reflecting a robust buffer against external shocks”.
The CBN governor said inflation trended upward, driven largely by high food prices, cost of energy and legacy infrastructural challenges, but it commenced deceleration from 34.19 per cent in June 2024 and to 33.40 per cent in July 2024.By August 2024, inflation had eased to 32.15%, largely due to monetary policy interventions by the CBN. Cardoso attributed this moderation to aggressive tightening measures, including an increase in the policy rate by 850 basis points to 27.25%.
According to the Apex bank governor “With aggressive monetary policy tightening coupled with robust monetary- fiscal policy coordination, inflation is expected to further trend downward in the near-to-medium term”.
He stated that to address inflation, the central bank has fully reverted to an orthodox monetary policy approach and has implemented a comprehensive range of monetary policy measures. These measures include increasing Cash Reserve Ratios and normalizing Open Market Operations to enhance liquidity management. Additionally, the introduction of an Inflation-Targeting (IT) monetary policy framework is anticipated to support the bank’s long-term economic objectives.
“Regarding the foreign exchange market, the Bank implemented various reforms including a unification strategy, which streamlined various exchange rate windows into a single model, adopting the ‘Willing Buyer, Willing Seller’ approach to enhance FX liquidity and financial market stability”.
This move was aimed at fostering transparency, reducing market distortions, and enhancing the efficiency of foreign exchange allocations.
