The Central Bank of Nigeria (CBN) had a N13.9 trillion ($9 billion) loss on the settlement of overdue derivatives contracts in 2024 as it tried to addressed foreign currency liabilities on its balance sheet and restore investor confidence on available measures to support the naira.
The loss more than doubled from 6.3 trillion naira in 2023 as Nigeria’s gross external reserves rose for a third consecutive day to $37.9 billion as of April 30, the highest level in three weeks.
The CBN had redeemed “legacy transactions” to “reduce outstanding foreign exchange liabilities, thus lowering its FX exposure,” and boost net foreign reserves and external buffers.
The central bank in 2023 published its finances as part of measures to assure investors of transparency in the running of the lender as well as foreign exchange management. This was being reformed to remove capital controls, enable the naira trade freely and lure inflows, required to end acute dollar shortage.
The CBN reported a substantial improvement in its Net Foreign Exchange Reserve (NFER) position as of the end of 2024, reflecting a substantial improvement in the country’s external liquidity, reduced short-term obligations, and renewed investor confidence.
NFER stood at $23.11 billion, the highest level in over three years, a marked increase from $3.99 billion at year-end 2023, $8.19 billion in 2022, and $14.59 billion in 2021.
Gross external reserves for Nigeria rose for a third day to $37.9 billion as of April 30, the highest in three weeks.
Liquidity management costs arising from the sale of high-yielding short-tenured fixed income securities intended to mop up excess liquidity, tame inflation and rein in the naira, rose to 4.5 trillion naira in 2024 from 1.5 trillion naira in the previous year, the central bank said.
The lender is committed “to external sector stability, ensuring Nigeria is better positioned to meet its international obligations, stabilize the naira, and boost macroeconomic confidence,” it said.
Current State of Nigeria’s External Reserves
The central bank said in April that it had settled deals such as currency swaps and forward contracts, bringing net foreign-currency reserves to $23 billion as of December.
Nigeria’s gross external reserves rose for a third consecutive day to $37.9 billion as of April 30, the highest level in three weeks, according to Bloomberg data..
Meanwhile, the cost of managing liquidity surged to 4.5 trillion naira in 2024, up from 1.5 trillion naira the previous year
This spike was driven by the central bank’s sale of high-yield, short-term fixed-income securities aimed at mopping up excess liquidity, curbing inflation, and stabilizing the naira.
