Naira Gains against USD as CBN Reports Highest Net FX Reserves in 3 Years
- The naira has appreciated against the dollar for two straight weeks, trading at a high of N1,531.25 per dollar
- The local currency’s rally against the dollar came amid CBN’s reported net FX reserve increase of $23.11 billion, the highest in three years
- On Wednesday, April 2, 2025, the naira appreciated again to N1,534 per dollar from N1,537 it traded the previous day
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The naira climbed to its highest against the dollar in two weeks after the Central Bank of Nigeria (CBN) reported a net forex reserve increase of $23.11 billion, the highest in three years.
The naira rallied at a one-week high of N1,531.25 per dollar on Monday, March 31, 2025, representing a 0.4% or N5.57 gain from N1,536 on Friday, March 28, 2025.
Source: Getty Images
Then the naira climbed again on Wednesday, April 2, 2025, closing at N1,534 from N1,357.
Data from the Nigerian Foreign Exchange Market (NFEM) shows that currency dealers quoted the naira at a high of N1,535 and a low of N1,525 per dollar.
However, the local currency remained stable in the parallel segment of the foreign exchange market, also known as the black market, trading at N1,560 for four days.
CBN reports highest FX reserve gain in 3 years
The Central Bank of Nigeria (CBN) reported on Tuesday, April 1, 2025, that it achieved an improvement in its net FX reserve (NFER) at $23.11 billion in 2024.
According to a statement from the apex bank, the NFER amount was the highest level of FX accruals in three years, relative to $3.99 billion in 2023, $8.19 billion in 2022, and $14.59 billion in 2021.
CBN governor explains why reserves grew
The earnings show an improvement in Nigeria’s external liquidity, reduced short-term obligations, and increased investor confidence.
Nigeria’s gross external reserves also rose to $40.19 billion in the review period, relative to $33.22 billion in 2023.
The CBN governor, Olayemi Cardoso, declared that the improved net FX reserves were due to deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying a solid foundation for long-term stability.
According to Cardoso, the bank remains focused on sustaining the progress via transparency, discipline and market-centric reforms.
NFER is regarded as a more authentic indicator of foreign exchange defence available to meet immediate external obligations.
CBN’s policies contribute to external reserves' growth
The increase shows a combination of measures by the CBN to reduce short-term FX liabilities such as swaps and forward obligations.
The boost was also due to policy reforms by the CBN to rebuild confidence in the FX market, increase forex buffers and improve FX inflows.
Source: Getty Images
Buoyant forex reserve good for naira, Nigeria
Speaking on the importance of a buoyant foreign exchange reserve to Nigeria, Dr Ifeanyi Ubah, an economist, told Legit.ng that the development could help stabilize the naira and boost economic confidence.
He said:
"Higher reserves give the CBN more room to intervene in the forex market, reducing volatility and cushioning the naira against external shocks.
"A more stable naira can help lower the cost of imports, which in turn reduces inflationary pressures on essential goods like food and fuel. This stability also makes Nigeria more attractive to foreign investors, who are often wary of currency risk.
"Furthermore, with improved investor confidence and a stronger reserve position, the government can better manage its external debts and fund development projects. For everyday Nigerians, this could translate into lower prices, improved job prospects, and a better standard of living."
He added that while the road to economic recovery remains challenging, a stronger reserve base is a crucial step towards restoring macroeconomic stability and rebuilding trust in the national currency.
CBN releases new exchange rates for the Naira
Legit.ng earlier reported that the Nigerian currency, the naira, crashed again in the official Nigerian Foreign Exchange Market (NFEM) for the second consecutive day on Thursday, March 27, 2025.
The local currency shed N1 from its value, trading at N1,537.66 per dollar from N1,536 it traded the previous day.
The naira experienced a slight volatility in the FX market after demand for the US dollar resurfaced amid reforms by the CBN.
This article has been updated by head of business desk, Victor Enengedi, with additional comments by an expert.
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Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
Pascal Oparada (Business editor) For over a decade, Pascal Oparada has reported on tech, energy, stocks, investment, and the economy. He has worked in many media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng
Kola Muhammed (Copyeditor) Kola Muhammed is an experienced editor and content strategist who has overseen content and public relations strategies for some of the biggest (media) brands in Sub-Saharan Africa. He has over 10 years of experience in writing and (copy)editing.
