Nigeria’s forex reserves fall to 0.26%, as global reserves hit $12.3trn

Global forex reserves reached $12.3 trillion at the end of 2023, a 3.5 per cent increase from the previous year, with the U.S. dollar maintaining a stable but historically lower share of global reserves, while the euro, pound sterling, and Japanese yen shares remained consistent.

Nigeria’s forex reserves declined to $32.3 billion by the end of 2023, representing just 0.26 per cent of global reserves, down from 0.36 per cent in 2022, mainly due to decreased forex inflows and increased outflows.

The composition of Nigeria’s forex reserves includes Chinese Renminbi and gold, with a significant portion encumbered by currency swap deals and collateral for loans, while global trends indicate a rising use of non-traditional reserve currencies driven by diversification and digital financial technologies.

Global forex reserves hit $12.3 trillion at the end of 2023 representing a 3.5 per cent year-on-year increase from the $11.92 trillion recorded a year earlier.

This is according to the latest data from the  IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER).

Nigeria’s forex reserves at the end of 2023 were $32.3 billion representing just 0.26 per cent of the global FX reserves. A four basis points decline from about 0.30 per cent as of 2022-end.
Forex reserves in Nigeria was $36 billion at the end of 2022, however, a combination of a decline in forex inflow and an increase in forex outflows resulted in a decline to $32.3 billion at the end of 2023.

On a quarter-on-quarter basis, Nigeria’s portion of the global FX reserves also declined, with the country’s share standing at 0.28 per cent as of the end of Q3 2023. Nigeria ended Q3 2023 with a FX reserve of $33.32 billion.
There was also a 4.2 per cent increase in QoQ in the global FX reserve from Q3 2023, which recorded a total global FX reserve of $11.85 billion.

In terms of currency shares, the U.S dollar share of global FX as of Q4 2023 was $6.687 trillion, representing 54.22 per cent, like Q4 2022, where the USD’s share was $6.46 trillion, or 54.21 per cent.

According to the IMF, this shift in the composition of the global foreign exchange reserves is linked to a rise in the share of non-traditional reserve currencies.

The share of the other currencies, including the Chinese Renminbi, Canadian Dollar, Australian Dollar, and Swiss Francs as of Q4 2023 was 10.3 per cent, up from 9.9 per cent as of Q4 2022, and 9 per cent as of Q4 2020. (Source: nairametrics)