The Central Bank of Nigeria (CBN) has recorded its highest Net Foreign Exchange Reserve (NFER) position at the close of 2024, marking a significant milestone in the country’s economic landscape.

According to data released by the CBN on Tuesday, the NFER surged to $23.11 billion, the highest it has been in over three years. This represents a considerable improvement from previous years, where it stood at $3.99 billion in 2023, $8.19 billion in 2022, and $14.59 billion in 2021.

This growth signifies enhanced external liquidity, reduced short-term financial obligations, and a renewed sense of confidence among investors. The NFER metric, which adjusts gross reserves by accounting for near-term liabilities such as foreign exchange swaps and forward contracts, is widely considered a more precise measure of the country’s available foreign exchange reserves to meet immediate external obligations.

Further insights from the CBN data reveal that Nigeria’s gross external reserves also experienced an increase, rising to $40.19 billion from $33.22 billion at the end of 2023. This marks a positive shift, particularly in light of the challenges faced in recent years.

Earlier, reports indicated that Nigeria’s foreign reserves had suffered a decline of $2.55 billion in the first quarter (Q1) of 2025. Data from the CBN highlighted a 6.23% drop in reserves, falling from $40.88 billion to $38.33 billion during this period. This decline was the highest recorded in a first quarter over the past five years.

A closer look at past trends shows that in Q1 2024, reserves fell by $810.66 million (2.45%), while in Q1 2023, the drop was $1.57 billion (4.24%). Similarly, in Q1 2022, external reserves decreased by $827.34 million (2.32%).

Despite these past setbacks, the recent improvement in Nigeria’s foreign reserves, now standing at N40.19 trillion, has been attributed to several key factors. The CBN has significantly reduced its exposure to short-term foreign exchange liabilities such as swaps and forward contracts, which had previously posed risks to liquidity. Additionally, increased foreign exchange inflows from non-oil sectors have played a crucial role in strengthening the reserve position.

Furthermore, the implementation of strategic policy measures by the CBN to restore confidence in the foreign exchange market has been instrumental in attracting more sustainable and stable inflows. These concerted efforts have contributed to the current positive outlook, reinforcing Nigeria’s ability to meet its external financial commitments and fostering long-term economic stability.

Source: Dailytrust