Nigeria’s foreign exchange reserves have surged to $23.11 billion at the close of 2024, marking the highest level in over three years. The Central Bank of Nigeria (CBN) reported this significant increase in its net foreign exchange reserves (NFER), compared to just $3.99 billion at the end of 2023. The jump from previous years, $8.19 billion in 2022 and $14.59 billion in 2021, demonstrates the country’s improving financial position. The NFER, which reflects the reserves available to meet immediate external obligations, shows a healthier buffer for Nigeria’s economy.
This boost in reserves also coincided with an increase in Nigeria’s gross external reserves, which rose to $40.19 billion by December 2024, up from $33.22 billion in 2023. According to the CBN, these gains were driven by targeted measures to reduce short-term foreign exchange liabilities, particularly from FX swaps and forward contracts. These liabilities had previously posed risks to Nigeria’s liquidity, but strategic reforms have alleviated much of this pressure.
CBN Governor Olayemi Cardoso highlighted that the significant improvements were the result of deliberate policy decisions aimed at restoring investor confidence, minimizing vulnerabilities, and building a more resilient reserve position. The CBN has also credited its efforts to encourage foreign exchange inflows, particularly from non-oil sectors, which contributed to strengthening the country’s financial standing.
Looking ahead, the CBN is optimistic that the positive trend in reserves will continue into 2025. Despite seasonal adjustments, such as interest payments on foreign debt, the underlying economic fundamentals remain strong. With improved oil production and a favorable export environment, particularly in non-oil sectors, Nigeria’s external liquidity is expected to remain stable, supporting a more stable exchange rate and enhancing long-term economic resilience.
Source: punch