Nigeria's foreign exchange reserves climbed by more than $2bn (R36.6bn) in July to $39.2bn (R717.2bn), the Central Bank of Nigeria (CBN) said on Thursday, driven by improved oil earnings and foreign portfolio and remittance inflows.

The jump in reserves offers some relief to Africa's largest economy, which is grappling with inflation, currency volatility and a fragile recovery. The increase could bolster Nigeria's ability to stabilise its currency and finance external obligations amid economic challenges.

Nigeria's economy has struggled with anaemic growth, debt and policy challenges for nearly a decade. Since coming to office in 2023, President Bola Tinubu has instituted bold reforms, including ending costly subsidies and devaluing the naira currency to spur growth. The CBN, under governor Olayemi Cardoso, has unified exchange rates and kept monetary policy tight to stabilise the naira and attract foreign investments.

Analysts said the forex reserves increase reflects a confluence of improved oil production, tighter monetary policy and renewed investor confidence after recent reforms.

Nigeria's oil output averaged 1.5-million barrels per day (bpd) in June and July, Opec data showed, including about 250,000 bpd of condensates. Brent crude prices have remained steady at about $70 (R1,280.85) per barrel during the time and inflation eased in June for the third straight month to 22.22%, down from 34.80% in December after soaring to repeated 28-year peaks last year.

Cardoso said the rise in foreign reserves “represents about 9.5 months of import cover for goods”.