Onome Amuge
Nigeria’s foreign exchange reserves climbed to $41.00 billion on 19 August, the highest level in 44 months, according to data published by the Central Bank of Nigeria (CBN). The milestone marks the strongest external buffer since December 2021 and signals a sharp turnaround in foreign-currency inflows after months of depletion and volatility.
The reserves have rallied by $1.46 billion since the beginning of August, rising from $39.54 billion on 1 August. The 3.7 per cent increase represents the fastest pace of accumulation since the Covid-19 recovery period in 2021, with reserves advancing steadily across trading days this month and only minor pauses in momentum. On average, the country added roughly $81 million per day in August.
The build-up gathered pace after reserves crossed the $40 billion mark on 7 August. By 12 August, the figure had advanced to $40.5 billion before breaching the $41 billion threshold a week later.
The improvement, however, has been heavily concentrated in recent weeks. At the end of December 2024, reserves stood at $40.88 billion, meaning the net year-to-date gain is only about $124 million, or 0.3 per cent.
For much of the first half of 2025, reserves fluctuated between $37 billion and $39 billion, weighed down by persistent external debt repayments, volatile oil receipts and central bank interventions to smooth liquidity in the FX market. In early July, the buffer slipped as low as $37.28 billion before staging its sharp recovery.
The rebound has restored Nigeria’s reserves to levels not seen since late 2021, before a prolonged drawdown that saw the country’s external buffers eroded through 2022 and 2023, when reserves struggled to hold above $38 billion.
Foreign-exchange reserves are also a key input into Nigeria’s sovereign credit outlook, providing reassurance to bondholders and portfolio investors. Analysts say the return to the $41 billion level is likely to be interpreted as evidence of stronger oil receipts, fresh portfolio inflows and improving non-oil export performance.
The CBN has recently reported a stabilisation in the FX market, citing improved crude oil output, sustained non-oil exports, increased capital inflows and lower import bills. Brent crude, Nigeria’s main export, has traded comfortably above $70 a barrel in recent months, offering some relief to government coffers after years of underproduction and theft weighed on oil earnings.
While the recent development strengthens Nigeria’s short-term external position,analysts assert that sustaining the momentum will depend on structural factors, including oil export reliability, non-oil FX receipts, and external debt service. Analysts caution that the concentration of gains in August could prove temporary if inflows moderate or if outflows accelerate later in the year.
For now, however, the improvement places Nigeria on firmer footing. At $41 billion, reserves are at their highest level in nearly four years, offering the central bank renewed firepower to stabilise the naira and support the government’s economic reform agenda under President Bola Tinubu.
