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•What this milestone means for Nigeria’s economy 

James Emejo in Abuja 

In the one of the most cheering news from Nigeria in recent times, the country’s gross Foreign Exchange Reserves increased yesterday (August 21, 2025) to $41.05 billion, the highest level in over 44 months, demonstrating the continued improvement in macroeconomic indices in recent times.

Even as the apex bank is targeting to build the country’s external to an impressive $100 billion.

A day before, external reserves rose to $41 billion from $40.96 billion on August 18, 2025, showing less volatility over the past one month.

Compared to about $40 billion, announced by the Central Bank of Nigeria (CBN) Governor, Mr. Olayemi Cardoso, as at July 18, external reserves had increased by about 2.62 per cent to date.

The current movement in reserves represented the highest level recorded since December 3, 2021, and has continued to maintain the upward trajectory in recent weeks.

Essentially, FX reserve movements are particularly crucial for economic stability, currency strength, import capacity, debt management, and overall investor confidence. Changes in the reserves could signal economic stress or health.

Amid huge debt service obligations, and revenue challenges, the stability in external reserves movement, coupled with a marked deceleration in inflation rate as well as Naira’s relative stability offer renewed hope for the country about better days ahead.

The development further attests to the position of the central bank’s management team that monetary policy actions are so far headed in the right direction.

Senior officials of the bank told THISDAY last night that the long term goal of the apex bank is to raise the country’s external reserves to at least $100 billion to further strengthen the economy and remove the toga of ‘fragility’ often associated with it.

Recall that during the last Monetary Policy Committee (MPC) meeting in July, Cardoso had attested to the sustained stability in the foreign exchange market, accentuated by improved capital flows, earnings from increased crude oil production, rising non-oil exports and significant reduction in aggregate imports.

He said:  “That clearly is a reflection of the way that the international investors view the banking system, and I was again very privileged to have a conversation with a good number of them about three or four weeks before this listing took place.

“And really and truly, a lot of interest, I must say, there is a lot of interest internationally, on putting money on the Nigerian financial system.

“The key thing is that we as regulators will continue to play our part to ensure that the system and the players and the actors continue to do what we are doing, creating resilience, creating buffer, and, of course, playing by the rules, because that is so important for those who are looking to invest that they can believe and they trust in you.”

What This Milestone Means for Nigeria

With over $41 billion in the kitty, the external reserves now offer fresh hope for the country’s fragile economy and currency market. The increase reflects improved oil receipts and tighter management of foreign exchange inflows, and could serve as a stronger buffer for the naira at a time of heightened economic pressures.

External reserves, which represent the stock of foreign currencies and assets held by the CBN, are critical for meeting the country’s import needs, servicing external debt, and stabilising the naira.

Recall that when Cardoso took office in September 2023, the CBN had very low net reserves, especially once short-term obligations like heavy forwards and swaps were deducted from gross reserves.

By the end of 2023, it was disclosed that Nigeria’s net FX reserves were just $3.99 billion, meaning that although gross reserves looked healthy,  the usable net reserves was less than $4 billion.