A financial expert, Uche Uwaleke, says the current size of Net Foreign Exchange Reserves at $23.11 billion will positively impact the value of the naira.

Mr Uwaleke, a professor of Capital Market at the Nasarawa State University, Keffi, is also the president of the Capital Market Academics of Nigeria.

He said this in an interview on Sunday in Abuja.

According to him, accretion to external reserves puts the Central Bank of Nigeria in a stronger position to defend the value of the naira.

“The CBN can leverage rising external reserves to intervene in the forex market whenever it becomes necessary to stabilise the exchange rate,” he said.

He, however, raised concerns that the increase in the nation’s foreign reserves had largely been due to temporary FX inflows such as Foreign Portfolio Investments and foreign loans.

He said they represented unsustainable sources of growing external reserves.

“Impatient capital such as FPIs carry a lot of risks and have the potential of destabilising the economy whenever they leave the country. Against this backdrop, the government should pay more attention to diversifying the export base of the economy, especially via agriculture and solid minerals.

“The government should also create the enabling environment that attracts sustainable foreign direct investments,” he said.

The CBN recently revealed that the NFER stood at $23.11 billion at the end of 2024, its highest level in three years.

The apex bank said the development significantly improved the country’s external financial position.

It said the NFER, which adjusts gross reserves to account for near-term liabilities such as currency swaps and forward contracts, stood at $3.99 billion at the end of 2023.

According to the CBN governor, Yemi Cardoso, the improved position was due to a substantial reduction in short-term foreign exchange liabilities, notably swaps and forward obligations.

Mr Cardoso cited measures aimed at boosting forex market confidence and reserves alongside increased non-oil foreign exchange inflows.

“This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability.

“We remain focused on sustaining this progress through transparency, discipline, and market-driven reforms,” Mr Cardoso, said.

He said that Gross external reserves also climbed to $40.19 billion at the end of 2024, up from $33.22 billion the previous year.

“Reserves declined in the first quarter of 2025 due to seasonal factors and foreign debt interest payments. The CBN anticipates a steady uptick in reserves throughout the second quarter,” Mr Cardoso said.

(NAN)