Nigeria’s foreign exchange reserves have reached $46.7 billion, marking a seven-year high, according to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN). He revealed this during a speech at the 20th anniversary colloquium of the CBN’s Monetary Policy Department in Abuja.

Cardoso noted that this level of reserves could cover over 10 months of imports, a significant buffer that underscores the country’s growing external liquidity. He attributed the increase to sustained inflows and renewed investor confidence resulting from recent fiscal and monetary reforms.

The governor also projected that lending rates may decline in the coming months as inflation continues to ease, which could improve access to credit and strengthen investment momentum. The $46.7 billion figure is the highest since 2018.

Why This Matters

• Import Cover: Reserves that can fund more than ten months of imports provide Nigeria with a stronger shield against global economic shocks.
• Policy Validation: The rise in reserves is being seen as a validation for the CBN’s recent strategies aimed at rebuilding investor trust and stabilizing the economy.
• Monetary Outlook: A stronger reserve position may allow the CBN to ease interest rates further, potentially boosting credit access and domestic investment.
• Currency Stability: Higher reserves improve the central bank’s ability to manage naira volatility and support its value.

Risks & Challenges

Despite the positive news, several factors require attention:

1. Sustainability: Maintaining high reserves depends on continued foreign inflows, including oil and non-oil exports and portfolio investments.
2. Inflation Pressure: Unexpected spikes in inflation could limit monetary policy flexibility.
3. External Vulnerabilities: Reserves may be tested by foreign debt obligations and global interest rate changes.
4. Overreliance on Reserves: Relying too heavily on reserves to stabilize the naira could be risky without structural economic reforms.

Looking Ahead

• To sustain this momentum, the CBN and government may continue promoting reforms that attract foreign investment and boost non-oil exports.
• Strengthening macroeconomic coordination between fiscal and monetary policy will be critical to maintain the reserve cushion without undermining growth.
• Interest rate adjustments may be considered if inflation continues to ease, but with careful attention to potential risks.

References

1. Nigeria’s Foreign Reserves Rise to $46.7 bn — The Will
2. Nigeria’s FX Reserves Now at $46.7bn — Business Post Nigeria
3. External reserves hit $40.1 bn in July 2025 — Nairametrics

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