Market News

BY  Wasiu Alli 

Nigeria’s net foreign exchange reserves (NFER) swelled to its highest levels in at least three years as measures implemented by the central bank to shore up its buffers are finally yielding results.

The net reserves jumped to $23.11 billion at the end of December, 2024, a significant leap from $3.99 billion recorded at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021.

“NFER stood at $23.11bn, the highest level in over three years, a marked increase from $3.99 billion at year-end 2023, $8.19bn in 2022, and $14.59bn in 2021,” the Central Bank of Nigeria (CBN) said in a statement on Tuesday.

Nigeria’s net reserves, derived by subtracting a country’s foreign exchange liabilities from its gross foreign exchange reserves, gives a more accurate picture of the country’s buffers and its ability to meet external obligations and serve as a shield against naira slide.

The CBN has since the assumption of Governor Olayemi Cardoso rolled out reforms to stimulate investor confidence and lure in capital flows to the country following the liberalization of the FX market and floating of the naira.

These efforts have seen the country’s gross external reserves increase to $40.19 billion as of December 2024, compared to $33.22 billion at the end of 2023.

This upward move in reserves reflects deliberate measures taken by the CBN to reduce short-term foreign exchange liabilities, particularly FX swaps and forward obligations.

According to the statement, Cardoso attributed the increase to strategic policy decisions aimed at enhancing investor confidence, reducing vulnerabilities, and building a more robust reserve position.

“This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability,” the CBN chief said.

It added that increased foreign exchange inflows from non-oil sources contributed to strengthening the reserve position.

The CBN expressed optimism about sustaining this upward trend in 2025 as it hopes to dish out measures to hold on to the momentum.

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While the first quarter showed some seasonal adjustments, including significant interest payments on foreign-denominated debt, the underlying fundamentals remained strong.

Reserves are expected to continue growing, driven by improved oil production levels and a favourable export environment, particularly from non-oil sectors.

The CBN said these factors would enhance Nigeria’s external liquidity and support a stable exchange rate. Cardoso reiterated the bank’s commitment to prudent reserve management, transparent reporting, and macroeconomic policies aimed at maintaining stability, attracting investment, and building long-term economic resilience.