• Says demand deposits rise to N29.67trn in May

Nigeria’s foreign exchange reserves have reached a high of $34.7bn, according to data obtained from the Central Bank of Nigeria’s website on Sunday.

This represents an increase of $110m from the previous day’s figure of $34.5bn.

The reserves have been steadily increasing over the past week, with a total gain of $316m since July 1.

This growth has been attributed to several factors, including the recent increase in oil prices, improved diaspora remittances, and the Central Bank’s efforts to stabilise the currency.

Experts believe that the increase in foreign exchange reserves is a positive development for Nigeria’s economy, as it provides a cushion against external shocks and supports the country’s ability to meet its financial obligations.

A recent Fitch Ratings has placed Nigeria’s economic outlook to positive, citing significant reforms that have restored macroeconomic stability and enhanced policy coherence and credibility.

Fitch said, “The positive outlook partly reflects reforms over the last year, which has reduced distortions stemming from previous unconventional monetary and exchange rate policies.”

The Central Bank has implemented various measures to manage the foreign exchange market, including the introduction of the Investors’ and Exporters’ window, which has helped to attract foreign investment and boost reserves.

The reforms have led to a return of sizable inflows to the official foreign exchange market and a significant rise in foreign portfolio investment inflows.

However, Fitch noted that short-term challenges remain, including high inflation and FX market volatility. Despite this, the agency expects further monetary policy tightening and strengthening of monetary policy transmission.

“The reforms have contributed to the restoration of macroeconomic stability and enhanced policy coherence and credibility.

“However, we see significant short-term challenges, notably high inflation, and the FX market has yet to stabilize, and the durability of the commitment to reform is to be tested,” Fitch stated.

Demand deposits rise N29.67trn in May

The CBN also revealed on its website that demand deposits have jumped by 206.83 percent from N9.67 trn in May 2019 to N29.67trn this year’s May.

The data showed that the country’s demand deposits grew by 9.31 percent between May 2019 and May 2020 to N10.57trn, despite global economic uncertainties caused by the COVID-19 pandemic.

The growth continued into 2021 and beyond, surpassing N20tn in early 2023.

Factors contributing to the growth include increased economic activities, government stimulus measures, and enhanced liquidity in the banking system.

Experts noted that while the growth in demand deposits reflected a resilient financial sector, it also required careful management to mitigate potential risks and ensure sustainable economic development.