Nigeria posts $5.14 billion in Current Account Surplus, bolstering forex stability

This is according to data from the central bank analyzed by Naijaonpoint.

This boost in the nation’s external balance reflects a reduction in import bills and steady remittance inflows, which have helped stabilize the naira against the dollar, keeping it in the N1,450-N1,500 range.

Amid economic headwinds, this surplus provides hope for a more stable foreign exchange (forex) landscape.

Information contained in the report shows a strong trade surplus primarily drove the current account surplus, with merchandise imports falling sharply and crude oil prices offering partial support.

Another key factor supporting the current account was the robust secondary income surplus, driven by remittances from Nigerians living abroad.

In the financial account, there was a notable increase in liabilities, which amounted to $2.27 billion in Q2 2024, reversing a $5.03 billion net reduction in Q1.

This influx highlights Nigeria’s attractiveness to short-term investors, although it points to a reliance on portfolio investments rather than direct foreign investment, which may present future vulnerabilities.

Nevertheless, the financial inflows contributed positively to forex reserves, reinforcing the naira’s stability.

Nigeria’s improved current account position in Q2 2024 had initially set a solid foundation for forex stability.

As oil revenues fluctuate and short-term investment inflows remain sensitive to global market conditions, Nigeria’s forex stability is likely to be tested in the months ahead.

Without sufficient dollar inflows from diverse sources, Nigeria’s currency could continue facing depreciation pressures, especially if external shocks or policy changes further disrupt the forex supply chain.