Nigeria’s Foreign Reserve Surges, Hits $40 Billion, Highest In 2Years

Nigeria’s foreign reserve has jumped the $40 billion mark on 18th October 2021, after it gained $566.45 million on Monday to close at $40.39 billion.

Brand News Day Nigeria understands that Nigeria’s foreign reserve’s new milestone is made known in data obtained by the Central Bank of Nigeria (CBN).

This online news platform reports that the nation’s foreign reserve grew by 1.42% on Monday from $39.82 billion recorded in the previous day.

The recent gains in the country’s reserve came on the back of the $4 billion Eurobond raised by the federal government from the international debt market.

Nigeria’s Foreign Reserve Surges, Hits $40 Billion, Highest In 2Years

Photo by Timis Alexandra

The federal government intended to raise about $3 billion from the Eurobond issuance, which was oversubscribed and gave the opportunity to raise an additional $1 billion, making it a sum of $4 billion raised. According to the Debt Management Office, the order book peaked at $12.2 billion, dubbing it one of the biggest financial trades recorded in Africa.

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Interestingly, Nigeria’s foreign reserve gained massively due to the recent Eurobond issued by the federal government. The Eurobond issued by the FG served as a major boost for the country’s reserve for its $4.43 billion gain, since the issuance. However, if the increasing amount in the foreign reserve is to be considered it is more than the Eurobond gathered, it is clear that other factors must have contributed to the positive rally seen in recent weeks.

The significant uptick could also be attributed to the positive rally recorded at the global crude oil market, gaining over 65% year to date. The price of Brent Crude increased from $50.9 per barrel to trade at $84.08, having hit a record high of over $86 per barrel.

Note that crude oil export accounts for over 85% of Nigeria’s total exports revenue. Hence a positive rally in the global crude oil market means more forex revenue and more firepower for the nation’s reserve, which means that the apex bank has more at its disposal to defend the exchange rate.