Nigeria strengthened its external financial position in 2024 with a significant increase in its gross foreign exchange reserves, reaching $40.19 billion compared to $33.22 billion a year earlier, an increase of more than 20%. This improvement is the result of the implementation of structural reforms undertaken to combat the weakening of external accounts and restore macroeconomic stability.
Specifically, the Central Bank of Nigeria has implemented policies aimed at reducing foreign exchange market volatility and attracting foreign investment. Furthermore, the rise in non-oil exports has improved foreign exchange earnings, thereby reducing dependence on usually fluctuating oil revenues.
Gross foreign exchange reserves, consisting of foreign currency held by the Central Bank of Nigeria, play a vital role in the stability of the naira, the financing of imports, and the inflow of foreign capital. Their increase reflects more rigorous management of financial flows and a diversification of sources of foreign currency income.
Despite the contraction in reserves in the first quarter of 2025, the Central Bank remains optimistic, anticipating a recovery in the second quarter thanks to an increase in oil production and non-hydrocarbon exports.
Maintaining this trend should help Nigeria better control exchange rate volatility, meet its external commitments and attract more investment without undermining economic growth through overly restrictive monetary policies.
