By Radarr Africa

Copyright radarr

Nigeria’s external reserves have risen to their highest level in six years, crossing the $42bn threshold for the first time since September 2019.

Fresh data from the Central Bank of Nigeria (CBN) showed that reserves stood at $42.03bn on September 19, 2025. This marks a strong rebound from earlier lows this year and has renewed optimism for stability in the nation’s foreign exchange market.

The figure represents a new 72-month peak and highlights steady improvement since July, when reserves slumped to their lowest point this year. Compared with the $41.99bn recorded the previous day, the September 19 level reflects an increase of $40m. It is also a substantial gain from the $41.42bn recorded at the beginning of September.

The last time reserves were higher was on September 26, 2019, when they reached $42.05bn. Since then, reserves came under pressure from weak oil prices, rising import demand, capital reversals, and interventions in the foreign exchange market.

What sets the current rally apart is its consistency. Every trading day in September has recorded growth in reserves, with 13 consecutive daily increases across 14 reporting sessions. Between September 1 and 19, reserves gained $610.8m, or 1.47 per cent, averaging $47m in daily growth.

The second half of the month has been especially strong. Between September 15 and 19, reserves rose by nearly $583m in just four business days. On September 8, reserves stood at $41.57bn, but within 11 days, they had gained $461.8m. Compared with the $41.31bn reported on August 29, reserves are now higher by $727.3m, representing a 1.76 per cent increase.

On a year-to-date basis, the reserves have grown by $1.15bn, or 2.83 per cent, from $40.88bn at the end of 2024. This performance contrasts sharply with July 3, when reserves dropped to $37.18bn—the lowest point in 2025. That level had triggered concerns over Nigeria’s ability to defend the naira and meet external obligations. Since then, reserves have gained $4.85bn, a recovery of about 13.05 per cent.

The renewed strength in external buffers has restored market confidence in Nigeria’s ability to manage exchange rates, service debts, and finance imports. The CBN now has stronger capacity to stabilise the foreign exchange market and boost import cover, an indicator closely tracked by investors and international rating agencies.

Economists say the six-year high is a psychological boost that could attract new portfolio inflows if policy consistency and competitive yields are maintained. They note that the build-up reduces fears about Nigeria’s ability to meet external obligations, particularly in debt servicing and trade financing.

Analysts at Cowry Assets Management described the September rally as a significant milestone for the naira. In their weekly outlook, they projected reserves could reach $45bn by the end of 2025, supported by steady inflows, improved oil earnings, and external borrowings.

“With stronger reserves, the CBN has more flexibility to intervene in the FX market, which should help keep the naira stable across both official and parallel markets,” the analysts said.

They, however, warned that risks remain. Global financial volatility, sudden reversals in portfolio inflows, or weak oil production could slow the momentum. Still, they said the current performance is remarkable, especially at a time when many emerging markets are struggling with external pressures.

The sustainability of the rally depends on continued inflows from crude oil exports, non-oil revenues, diaspora remittances, and foreign investments. Analysts caution that a decline in oil prices or speculative pressures could threaten gains. Conversely, stronger oil production, transparent FX policies, and better coordination between fiscal and monetary authorities could consolidate the progress.

If maintained, Nigeria could not only surpass the late-2019 levels but also rebuild reserves to above $45bn, levels last seen in the mid-2010s. For now, the September rally has shifted Nigeria’s 2025 reserves story from weakness to strength.

From a low of $37.18bn in July to $42.03bn in September, the turnaround signals resilience and provides a window for policymakers to reinforce investor confidence in the Nigerian economy. Whether the momentum continues into the fourth quarter will be crucial in determining naira stability and long-term external balance.