Naira Stable as External Reserves Hit Eight-Month High of $40.15bn
The naira has maintained relative stability across the foreign exchange (FX) markets as Nigeria’s external reserves rebounded to an eight-month high of $40.15 billion.
Data from the Central Bank of Nigeria (CBN) revealed that the last time the reserves reached this level was on January 20, 2025, when they stood at the same $40.15 billion. This rebound represents a 1.5 percent increase from $39.54 billion recorded on August 1, 2025.
The local currency closed the five trading days flat across FX market segments. At the Nigerian Foreign Exchange Market (NFEM), the naira ended Friday at N1,533.56 per dollar, reflecting a marginal depreciation of 1.61 percent compared to N1,531.95 on Monday. However, on a year-to-date basis, it has gained 0.5 percent, strengthening by N7.8 from N1,541.36 quoted at the start of the year, according to CBN data.
In the parallel market, commonly referred to as the black market, the naira closed unchanged at N1,560 per dollar on Friday, the same as Monday’s rate. Year-to-date, it has appreciated by 6.4 percent from N1,660 traded at the beginning of 2025.
Latest CBN data, as reported by FBNQuest, showed that Nigeria’s gross official reserves rose by nearly $2.2 billion month-on-month to $39.4 billion as of the end of July 2025, reversing the $1.2 billion decline recorded in June. This represents the largest monthly gain since July 2024, when reserves grew by $2.6 billion. Despite this recovery, year-to-date reserves have still fallen by about $1.1 billion, reflecting CBN’s sustained interventions in the FX market and settlements of external debt obligations.
The significant reserve accretion provides the CBN with greater flexibility to sustain its intervention strategy, supporting market liquidity and helping to stabilise the naira. As of July’s close, gross external reserves covered 11.9 months of merchandise imports for the 12 months to December 2024, and 8.2 months when imported services are included. This level of coverage represents a robust external buffer, crucial for sustaining investor confidence and exchange rate stability, especially in the context of global uncertainties.
The month-on-month growth in reserves is attributed largely to sustained inflows from offshore investors, reflecting renewed investor confidence in Nigeria’s financial markets, bolstered by attractive carry-trade opportunities, improved macroeconomic conditions, and a relatively stable exchange rate environment. Additionally, reduced FX demand, driven by lower import activity as businesses and consumers cut back on foreign purchases due to high FX costs, has eased pressure on reserves.
Looking forward, analysts at FBNQuest expect continued accretion to reserves, supported by persistent offshore inflows and anticipated external borrowings. This, according to the report, could see Nigeria’s reserves climbing to around $40.1 billion by year-end, reinforcing the country’s ability to maintain currency stability and market confidence.
A new report by United Capital Research noted that improved sentiment could drive further stability in the FX market, with potential for naira appreciation. The firm projects the naira to close 2025 within the N1,490–N1,520 per dollar range.
