Nigeria’s foreign exchange reserves have surged to $41.046 billion, marking the highest level since December 2021 and signaling renewed investor confidence in Africa’s largest economy.
The Central Bank of Nigeria’s latest data reveals a remarkable $1.5 billion increase within August alone, representing a 3.8 percent monthly growth that economists attribute to comprehensive monetary policy reforms. This substantial accumulation follows years of depletion when reserves dropped to nearly $31 billion as authorities intervened to support the naira.
The reserve buildup directly correlates with the apex bank’s strategic initiatives, including the resolution of over $7 billion in foreign exchange backlogs and the implementation of exchange rate unification policies. These measures have eliminated arbitrage opportunities while attracting international portfolio investors seeking higher yields on Nigerian treasury securities.
“The substantial accretion in reserves results from various CBN reforms aimed at sanitizing the forex market and making Nigeria attractive to portfolio investors,” explained Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co. The elevated yields on government securities and periodic open market operations have particularly resonated with international investors.
Economic analysts project continued reserve growth, with projections suggesting the reserves could maintain upward momentum through increased crude oil production and stable global commodity prices. The government’s planned external borrowing of $3.2 billion in the second half of 2025 is expected to provide additional support to foreign exchange inflows.
The naira has responded positively to these developments, appreciating slightly to N1,535.78 per dollar at the Nigerian Foreign Exchange Market, while remaining stable around N1,550 at parallel market rates. This stability reflects growing market confidence in the monetary authority’s ability to manage exchange rate pressures.
However, financial experts caution about Nigeria’s continued dependence on short-term capital flows for market liquidity. While Foreign Portfolio Investments provide immediate support, they introduce vulnerability to shifts in global risk appetite and international interest rate dynamics, requiring sustained policy consistency to maintain current momentum.
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