Nigeria’s Foreign Reserves Rise to Highest Level in Almost 4 Years
- Nigeria’s foreign exchange reserves have risen to an almost four-year high following several reforms undertaken by the CBN
- The increase in the nation’s reserves is positive for the naira in the foreign exchange market, amid recent pressures
- The rise in reserves now gives the Central Bank of Nigeria more firepower to defend the currency
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Central Bank of Nigeria (CBN) has revealed that Nigeria’s foreign exchange reserves rose to $41 billion on August 19, 2025.
This is the highest level FX reserves have reached in 44 months, almost four years.
Source: Getty Images
The latest level of Nigeria’s foreign reserves, at $41 billion, is the highest since December 3, 2021, marking a significant recovery after months of depletion caused largely by external debt repayments.
Breakdown of FX reserves increase
In August alone, reserves rose by $1.46 billion, from $39.54 billion on August 1 to $41 billion on August 19, a 3.69% increase in less than three weeks.
The surge began in early August when reserves crossed the $40 billion mark on August 7, after closing July at just under $39.4 billion.
By August 12, reserves had reached $40.5 billion, and momentum continued, pushing them past $41 billion a week later.
On average, reserves grew by $81 million per day in August, reflecting stronger foreign exchange inflows relative to outflows, supported by oil revenues and portfolio flows.
Between January and June 2025, reserves fluctuated between $37 billion and $39 billion, influenced by oil price volatility, debt obligations, and FX market interventions. However, since July, reserves have surged by over $3 billion, representing an 8% growth within a month.
At $41 billion, Nigeria’s reserves are now at their highest level since late 2021.
Source: Getty Images
Good news for naira
This increase is a positive development for the CBN, strengthening its ability to stabilise the naira and manage liquidity in the official market.
The rise in reserves gives CBN more firepower to defend against speculative pressures.
A stronger reserves position is crucial for Nigeria’s economic stability. It improves the country’s sovereign credit outlook, reassures investors of the government’s ability to meet external obligations, and bolsters the CBN’s capacity to manage liquidity shocks.
Why is FX reserves growth is important
- The CBN use it to manage exchange rate stability
- It is also used to pay external debt
- It is also used to support importation
Naira appreciates against US dollar
Earlier, Legit.ng reported that after four days of losses, the Nigerian currency appreciated against the United States dollar.
The latest movement, captured by the CBN, showed improvement both in the official and parallel markets.
The naira also appreciated against the British pound sterling in the official market.
Analysts attributed the modest gain to improved dollar liquidity from CBN interventions and rising foreign inflows.
Analysts predict:
“The naira is likely to stay in a narrow band between N1,520 and N1,560 next week.”
Source: Legit.ng
