Nigeria’s foreign reserve increased by $674.4 million last month, the Central Bank of Nigeria has revealed.
The latest figure from the CBN’s daily external reserve tracker, revealed that Nigeria’s foreign reserves rose from $38.48 billion at the start of June to $39.1 billion at the end of the month.
The central bank of a nation uses assets kept in reserve called foreign reserves to support obligations and shape monetary policy.
They comprise foreign bonds, treasury bills, deposits, banknotes, and other types of foreign government securities.
These assets serve many purposes but are most significantly held to ensure that a government or its agency has backup funds if their national currency rapidly declines.
On May 13, when they were $39.01 billion, Nigeria’s reserves last crossed the $39 billion threshold.
The CBN explained the low foreign reserve levels in prior months at the most recent Monetary Policy Committee (MPC) meeting in May by pointing to the high import costs for refined petroleum products.
Adenikinju Adeola Festus, a committee member, had raised concern at the meeting that the Nigerian economy would face difficulties as a result of the low reserves.
He said: “I am worried that Nigeria is not able to benefit maximally from the current upsides in the global oil market.
“We were not only unable to ramp up our production levels to meet the OPEC quota, no accretion to foreign reserves is also taking place, and government deficit and public debts are going north at a time we should be writing down our debt profiles and even building up a buffer for the inevitable raining days ahead.”
