Analysts have forecasted that Nigeria’s external reserves could reach about $45bn by year-end, bolstering the Central Bank of Nigeria’s capacity to stabilise the foreign exchange market and the wider economy.

The projection comes on the back of reserves rising to $41bn last Tuesday, the highest level in 44 months, according to CBN data.

The recovery marks a sharp turnaround from earlier declines caused by external debt repayments.

In August alone, reserves have grown steadily, climbing by $1.56bn from $39.54bn on August 1 to $41.11bn on August 22 — a 3.95 per cent increase in just three weeks.

Cowry Assets Management, in its weekly market report, noted that the growth trend is expected to persist, driven by consistent offshore inflows and the federal government’s planned external borrowings.

“The combination of these factors should keep the reserves on an upward trajectory in the coming months. Our projection suggests that Nigeria’s reserves could rise to about $45bn by the end of 2025, provided global risk conditions remain broadly supportive and offshore flows are not significantly disrupted. With the reserves position strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market. This, in turn, should help to maintain relative stability in the naira across both official and parallel markets,” the experts said.

The analysts, however, cautioned that the outlook carries risks, as volatility in global financial markets or a sudden reversal of portfolio inflows could weaken the current momentum.“As shifts in global financial markets or a sudden reversal in portfolio inflows could challenge the resilience of the current momentum. Nevertheless, the recent build-up represents a significant achievement and a positive signal for Nigeria’s external stability at a time when many emerging markets continue to grapple with external vulnerabilities,” it stated.

Analysts at Meristem Securities also shared a positive outlook, projecting that the reserves are likely to remain above the $40bn mark if the prevailing trends continue.

They said, “The stronger reserve position is expected to enhance the CBN’s capacity to stabilise the naira, bolster investor confidence, and support external balance. With oil receipts improving, portfolio inflows strengthening, and non-oil exports gaining traction, the momentum could be sustained in the near term. If current trends persist, reserves are likely to remain above the $40bn threshold, providing a solid buffer for exchange rate management and broader macroeconomic stability.”

Market watchers have consistently noted that the CBN’s interventions in the foreign exchange market remain crucial in maintaining the stability of the naira.