External reserves rise to $40.76bn

Nigeria’s external reserves jumped from $36.78 billion on September 30, 2021, to $40.76 billion on October 20, 2021, latest data obtained from the Central Bank of Nigeria (CBN) shows. This means that the reserves increased by $3.98 billion in 20 days. In the wake of the sharp drop in the price of oil (the commodity that accounts for 90 per cent of the country’s export earnings) and the impact of COVID-19 crisis, the reserves headed south for most part of 2020 and the first eight months of this year. However, they have been on an upward trend in the last few weeks.

Analysts attribute the current surge in the external reserves to Nigeria receiving $3.35 billion as its share of the International Monetary Fund’s (IMF) $650 bilion Special Drawing Rights (SDRs) -about SDR 456 billion – allocation, which came into effect on August 23, as well as the $4 billion that the country raised through Eurobonds, last month.

The SDR, an international reserve asset created by IMF in 1969 to supplement its member countries’ official reserves, can be exchanged among governments for freely usable currencies in times of need. Announcing the take -off of the $650 billion SDRs, which are aimed at helping IMF member countries cope with the impact of the COVID-19 crisis, IMF Managing Director, Kristalina Georgieva, stated at the time that “the SDR allocation will provide additional liquidity to the global economic system supplementing countries’ foreign exchange reserves.’

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