Nigeria’s external reserves have been projected to reach $45 billion by the end of 2025, bolstering efforts by the Central Bank of Nigeria (CBN) to stabilise the naira and pave the way for economic growth.
This comes as external reserves have recorded a steady rise in recent times, reaching $41 billion on Tuesday, August 19, 2025, the highest level in about four years.
As of August 25, 2025, Nigeria’s external reserves rose to $41.19 billion. This represents a 4.17 per cent increase (or $1.65 billion) from $39.54 billion on August 1, 2025.
Analysts at Cowry Assets Management project that the reserves could reach $45 billion by December 2025 if global risk conditions remain supportive and offshore flows are not disrupted.
“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 $45bn by the end of 2025, provided global risk conditions remain broadly supportive and offshore flows are not significantly disrupted,” the analysts stated.
The experts noted that the strengthening of the external reserves will enable the CBN 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,” they added.
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The analysts warned that the outlook wasn’t without risks, noting that “shifts in global financial markets or a sudden reversal in portfolio inflows could challenge the resilience of the current momentum.”
They, however, stated that the recent rise of the external reserves “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.”
Impact on the Naira
They believe that the strengthening reserves are expected to enhance the CBN’s ability to stabilise the naira and maintain relative stability in both official and parallel foreign exchange market windows.
The naira has remained relatively stable in both official and parallel markets for some months now, oscillating between N1,500 and N1,600 per dollar.
As of Monday, August 25, 2025, the naira traded at N1,536.42 per dollar at the Nigerian Foreign Exchange Market (NFEM), where the local currency is officially traded. This is a slight depreciation (N1.39) from N1,535.03 traded on Friday, 22 August, according to CBN’s exchange rate data.
Reserves Growth Sustainability
The primary function of foreign reserves is to enable the CBN to intervene in the foreign exchange market to stabilise the naira. Higher reserves enable the apex bank to mitigate speculative pressures and reduce volatility and also implement independent monetary policies, such as interest rate adjustments and inflation targeting, without excessive external constraints.
Commenting on the appreciation of the foreign reserves, analysts at Comercio Partners said the rebound of the reserves suggests a mix of stronger oil-related inflows as production has increased to 1.8 million barrels per day (according to the Nigerian Upstream Petroleum Regulatory Commission) and the recent upsurge in capital market participation.
The reserves provide a buffer against economic shocks and external vulnerabilities, especially in import cover and debt servicing. The CBN governor, Dr Olayemi Cardoso, had in July, after the 301st Monetary Policy Committee meeting, said Nigeria has about 9.5 months of import cover.
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The analysts at Comercio Partners observed that at the current level, the reserves can cover several months of import demand and provide a stronger cushion ahead of external debt obligations due later this year.
“This reduces immediate rollover risk and signals to investors that Nigeria retains liquidity strength,” the analysts stated.
They, however, warned that oil revenues remain highly sensitive to price and production swings, while debt service continues to absorb a significant share of external receipts.
The experts stressed that the key test of the sustainability of the reserves’ strengthening position “is whether the current rise represents a structural improvement driven by policy reforms and diversified inflows or a cyclical upswing tied to favourable oil receipts.”
“If the latter”, the analysts continued, “the reserves could again come under pressure when oil prices soften or debt payments peak.”
Historically, Nigeria’s reserves reached a record high of $62.08 billion in September 2008.
The current projection of $45 billion reflects a significant recovery from recent lows, driven by policy measures and improved inflows.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
