External reserves projected to hit $45bn by year-end

Analysts have projected that Nigeria’s external reserves could rise to around $45bn by the end of the year, a development that would significantly strengthen the Central Bank of Nigeria’s (CBN) ability to provide a buffer for the foreign exchange market and the wider economy.

This projection comes on the back of data from the CBN showing that external reserves climbed to $41bn last Tuesday—the highest level in 44 months. The rebound marks a notable recovery after previous declines, which had been driven by external debt repayments.

In August alone, the reserves recorded a steady increase of $1.56bn, rising from $39.54bn on August 1 to $41.11bn by August 22, representing a 3.95% growth in less than one month.

According to analysts at Cowry Asset Management, this growth momentum is expected to continue, supported by consistent offshore inflows and potential external borrowings being considered by the government.

“The combination of these factors should keep 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. With reserves strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market. This, in turn, should help maintain relative stability in the naira across both official and parallel markets,” the experts noted.

However, they also sounded a note of caution, warning that the outlook is not without risks. Global financial shifts or a sudden reversal in portfolio inflows could test the resilience of the current upward trend. Still, the analysts maintained that the recent build-up in reserves represents a significant milestone and a positive signal for Nigeria’s external stability, especially at a time when many emerging markets are struggling with vulnerabilities.

Similarly, analysts at Meristem Securities expressed optimism, projecting that the reserves are likely to remain above the $40bn threshold if current trends persist.

They explained:

“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 $40bn threshold, providing a solid buffer for exchange rate management and broader macroeconomic stability.”

Market watchers have also pointed out that the CBN’s intervention in the FX market remains critical in stabilising the naira. Experts at AIICO Capital highlighted that during the past week, liquidity was constrained in the early part due to limited intervention by the CBN. However, later interventions amounting to about $50m, alongside inflows from oil transactions, helped ease pressure and narrow spreads.

By the end of the week, trading stabilised within the range of ₦1,534.50–₦1,536.00 per dollar, though the naira still depreciated slightly, closing 16 basis points weaker week-on-week at ₦1,535.04/$.

At the close of trading on Monday, the naira stood at ₦1,536.42/$, about 0.09% weaker than the previous day’s close.