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

Uwaleke, a Professor of Capital Market at Nasarawa State University, Keffi, is also the President of the Capital Market Academics of Nigeria.

He made this statement in an interview on Sunday in Abuja.

According to him, an increase in external reserves puts the Central Bank of Nigeria, CBN, 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 stabilize the exchange rate,” he said.

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

He noted that these represented unsustainable sources of growing external reserves.

“Impatient capital, such as FPIs, carries a lot of risks and has the potential to destabilize 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 through agriculture and solid minerals.

“The government should also create the enabling environment that attracts sustainable Foreign Direct Investments (FDIs),” he said.

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

The apex bank stated that this development signaled a significant improvement in the country’s external financial position.

It explained that 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, particularly swaps and forward obligations.

Cardoso cited measures aimed at boosting forex market confidence and reserves, along with 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,” Cardoso said.

Uwaleke added 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, but the CBN anticipates a steady uptick in reserves throughout the second quarter,” Cardoso said.

NAN