Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies.
These reserves are used to back liabilities and influence monetary policy. It includes any foreign money a central bank holds, such as the Central Bank of Nigeria (CBN).
Why reserve foreign assets?
According to the International Monetary Fund (IMF), “International reserves (or reserve assets in the balance of payments) are those external assets that are readily available to and controlled by a country’s monetary authorities.
“They comprise foreign currencies, other assets denominated in foreign currencies, gold reserves, special drawing rights (SDRs), and IMF reserve positions.
“These reserves may be used for direct financing of international payments imbalances or for indirect regulation of the magnitude of such imbalances via intervention in foreign exchange markets in order to affect the exchange rate of the country’s currency”.
What is Nigeria’s foreign exchange reserve?
NewsWireNGR in the first week of July, 2023 reports that Nigeria’s external reserve has fallen by almost $1 billion since the presidency of Bola Ahmed Tinubu.
This is despite the unification of the naira and the introduction of a managed exchange rate float. The external reserves was $35 billion as of May 30th but presently stood at $34.1 billion. This is despite the unification of the naira and the introduction of a managed exchange rate float.
The external reserves opened the year at about $37 billion but have now dropped to about $34.1 billion as of June 2023.
This means the reserve has fallen by about $2.8 billion in the first half of 2023 as Nigeria continues to struggle with weak crude oil output and a lack of foreign investor participation in the capital market. Nigeria’s external reserve is an important barometer for valuing the country’s currency. It also estimates how many months of imports it can finance.
Below are the top 10 countries with the highest foreign reserve:
1. China – $3.4 Trillion
2. Japan – $1.25 Trillion
3. Switzerland – $912 Billion
4. India – $596 Billion
5. Russia – $587 Billion
6. Taiwan – $561 Billion
7. Hong Kong – $430 Billion
8. South Korea – $423 Billion
9. Saudi Arabia – $404 Billion
10. Brazil – $341 Billion
Disclaimer
The information in this article was curated from online sources. All details cannot be independently verified by NewsWireNGR or its editorial team.
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