The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has said that Nigeria’s rising external reserves will strengthen the naira, stabilise the economy, and boost investor confidence.

He explained that strong reserves also enable Nigeria to meet its external financial obligations and moderate inflationary pressures.

“When you have robust reserves, it strengthens the currency and ensures stability. It also builds both domestic and foreign investors’ confidence that this is a healthy economy, good for investment, the government, and the overall corporate environment,” Yusuf told Leadership in a recent interview.

“If the exchange rate is not weakening, the likelihood of inflation decelerating also increases,” he added, describing the recent growth as “a very positive development for the economy and an indication that some of the administration’s reforms are beginning to yield results.”

Nigeria’s Reserves Hit $41 Billion

Naijaonpoint reports that the latest data from the Central Bank of Nigeria (CBN), Nigeria’s external reserves stood at $41.046bn as of August 20, 2025, the highest in almost four years.

The reserves had previously fallen to about $31bn last year as the apex bank drew down to defend the naira.

However, with reforms in the forex market, the reserves have been on a steady rise since early 2025.

CBN data showed that while reserves grew by only 0.39 per cent year-to-date (from $40.883bn on January 2), much of the accretion happened in August.

Within 20 days, reserves jumped from $39.54bn on August 1 to $41.046bn, a rise of $1.5bn or 3.8 per cent.

Experts Credit CBN Reforms

Reacting to the development, the Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, said the improvement reflected reforms introduced by the CBN to sanitise the forex market and lure investors.

He cited the unification of exchange rates, clearance of over $7bn forex backlog, and the launch of the Nigeria FX Code as steps that restored market confidence.

CBN Governor Olayemi Cardoso also assured that the trend would continue.

“We have done what we should do, which is act as a catalyst to ensure that this happens. And it is happening. It is beginning to happen. Believe me, the numbers are showing us it is beginning to happen,” he said at the last MPC meeting.

Analysts noted that elevated treasury yields, periodic OMO auctions, stronger crude oil prices, and improved production volumes were also helping boost inflows.

A mid-year outlook by CardinalStone projected reserves would rise above $41bn by year-end, buoyed by the federal government’s plan to raise $3.2bn in external borrowings and continued portfolio inflows.

Naira Gains Slightly

Meanwhile, the naira appreciated modestly at the Nigerian Foreign Exchange Market (NFEM), closing at ₦1,535.78/$ on Thursday compared to ₦1,536.73/$ on Wednesday.

The currency remained stable at the parallel market, trading between ₦1,545 and ₦1,550/$.

Analysts at FBNQuest Merchant Bank, however, warned of risks tied to dependence on portfolio inflows.

“The sustained dominance of FPIs as a key source of forex supply highlights Nigeria’s dependence on short-term capital flows to sustain market liquidity. While this can provide immediate support, it also introduces significant vulnerability,” the firm stated.