Naira Rebounds as Nigeria’s Foreign Reserves Hit $41.2 Billion, Boosting Investor Confidence

The naira regained strength on Wednesday after two days of marginal losses, supported by Nigeria’s external reserves crossing the $41 billion mark for the first time in over four years. Data from the Central Bank of Nigeria (CBN) showed the local currency closed at N1,537.07 per dollar at the Nigerian Foreign Exchange Market (NFEM), appreciating slightly from the previous day’s N1,537.61.

In the parallel market, popularly called the black market, the naira traded steadily at N1,540 per dollar, while GTBank’s FX rate for international transactions also remained unchanged at N1,544 since Monday. Analysts note that stability across official and unofficial markets reflects improved liquidity and rising investor optimism.

CBN data further revealed that Nigeria’s external reserves climbed to $41.22 billion as of August 26, 2025, marking a significant milestone since March 2021, when reserves last stood above $41 billion. This represents a year-on-year increase of 12.42 percent from $36.47 billion in August 2024. The steady accumulation of reserves enhances the CBN’s capacity to defend the naira and cushion against external shocks.

A report by FBNQuest highlighted that total foreign exchange inflows rose by 24 percent month-on-month in July 2025, reaching $3.8 billion, compared to $3.1 billion in June. The recovery was largely driven by Foreign Portfolio Investments (FPIs), which accounted for about 45 percent of inflows, underscoring renewed but cautious investor appetite. Offshore investor inflows increased to $1.7 billion in July, up from $1.5 billion in June.

Despite the rebound, analysts caution that Nigeria’s FX market remains volatile, with inflows still well below the $6.7 billion peak recorded in May. However, the combination of rising reserves, improved liquidity, and stable global conditions suggests a gradual restoration of investor confidence in Africa’s largest economy.

Source: Business Day