Nigeria’s foreign exchange reserves climbed to $41 billion on August 19, 2025, reaching their highest level in 44 months, according to figures from the Central Bank of Nigeria (CBN).
The reserves which can now cover approximately 10 months of imports, mark a significant turnaround for the economy after years of pressure from external debt repayments.
This level, last seen on December 3, 2021, reflects a sustained recovery in the country’s external buffers. This is attributed to improved foreign exchange inflows, stronger oil revenues, reduced import demand, and reforms instituted by the federal government.
The rise in reserves enhances the CBN’s ability to stabilise the naira, manage liquidity, and defend against speculative pressure in the market.
As a result of this development, the projection at the CBN is to build external reserves to at least $100 billion to further strengthen the economy and remove the perception of fragility that has trailed Nigeria’s external accounts.
According to data from the CBN, the growth has been particularly strong in August.
Reserves have risen by $1.46 billion month-to-date, climbing from $39.54 billion on August 1 to $41 billion on August 19. This represents a 3.69 per cent increase in less than three weeks, with an average daily growth of $81 million.
The upward momentum began in early August when reserves crossed the $40 billion mark on August 7, after closing July just under $39.4 billion. By August 12, the reserves had advanced to $40.5 billion, and a week later, they pushed past $41 billion.
This steady accretion shows that inflows are consistently exceeding outflows, a major boost for investor confidence. Combined with declining inflation and a drop in commodities prices, it signals that economic reforms are beginning to yield results.
Although August has delivered significant gains, the year-to-date performance is more modest. Nigeria’s reserves were at $40.88 billion at the end of December 2024. The latest figures represent a marginal increase of $124 million, or 0.30 per cent, since the beginning of the year.
The bulk of the growth has come in the last five weeks, after a relatively sluggish first half of 2025 when reserves fluctuated between $37 billion and $39 billion. That period was shaped by volatile oil prices, debt repayments, and the CBN’s interventions in the foreign exchange market. Since July, however, reserves have surged by over $3 billion, representing 8 per cent growth in just over a month.
At $41 billion, Nigeria’s reserves stand at their strongest position since late 2021. This development comes after the prolonged decline witnessed during 2022 and 2023, when reserves hovered just above $38 billion amid intense pressure on the naira.
At the last Monetary Policy Committee (MPC) meeting in July, the CBN Governor Olayemi Cardoso had pointed to the improving fundamentals behind the reserves’ rally, citing higher capital inflows, better crude oil production, rising non-oil exports, and reduced import volumes.
He told reporters: “That clearly is a reflection of the way that international investors view the banking system. I was very privileged to have a conversation with a good number of them about three or four weeks before this listing took place. And really and truly, there is a lot of interest internationally in putting money into the Nigerian financial system.
“The key thing is that we as regulators will continue to play our part to ensure that the system and the actors within it continue to create resilience, create buffers, and, of course, play by the rules, because that is so important for those who are looking to invest—that they can believe and they trust in you.”
Economists believe the stronger external buffers will improve Nigeria’s sovereign credit outlook, reassure international investors of the government’s ability to meet foreign obligations, and provide the CBN with greater capacity to manage liquidity shocks.
With stronger reserves, declining inflation, and relative currency stability, analysts say businesses and households stand to benefit from an improved macroeconomic environment. The current trajectory, they argue, could set the stage for sustained growth if reforms are maintained and external inflows remain steady.
