Nigeria’s external reserves could rise to about $45 billion by the end of the year, market analyst say, following established trends.
Last Tuesday, the foreign exchange reserves of the country increased to $41 billion, the highest level recorded in 44 months, according to data from the Central Bank of Nigeria (CBN).
The development is a positive signal for the Naira, which has recorded one of its best periods of stability in recent months. On Monday, the local currency closed at N1,536 per Dollar at the official market.
The appreciation in the reserves also signalled a significant recovery following depletion driven by external debt repayments.
This month, the reserves have experienced a sustained appreciation. They increased by $1.56 billion from $39.54 billion on August 1 to $41.11 billion on August 22, representing a 3.95 per cent increase within the month.
According to the analysts at Cowry Assets Management in their weekly market report, the momentum of reserve growth appears likely to continue, supported by steady offshore inflows and potential external borrowings planned by the government.
“The combination of these factors should keep the reserves on an upward trajectory in the coming months. Our projection suggests that Nigeria’s reserves could rise to about $45 billion by the end of 2025, provided global risk conditions remain broadly supportive and offshore flows are not significantly disrupted. With the reserves position strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market. This, in turn, should help to maintain relative stability in the Naira across both official and parallel markets,” the experts said.
However, the analysts warned that challenges remain from externalities.
“As shifts in global financial markets or a sudden reversal in portfolio inflows could challenge the resilience of the current momentum. Nevertheless, the recent build-up represents a significant achievement and a positive signal for Nigeria’s external stability at a time when many emerging markets continue to grapple with external vulnerabilities,” they warned.
On their part, Meristem Securities analysts gave a lower expectation but maintained that the outlook was also positive. They projected that the reserves may well stay above the $40 billion threshold if current trends persist.
“The stronger reserve position is expected to enhance the CBN’s capacity to stabilise the Naira, bolster investor confidence, and support external balance. With oil receipts improving, portfolio inflows strengthening, and non-oil exports gaining traction, the momentum could be sustained in the near term. If current trends persist, reserves are likely to remain above the $40 billion threshold, providing a solid buffer for exchange rate management and broader macroeconomic stability,” the firm stated.