Nigeria’s foreign exchange reserves is expected to continue its growth trend next year, giving the naira the needed firepower to sustain its stability as the central bank predicts external reserves rising to $51.04 billion, supported by market reforms.
“Reforms in the foreign exchange market are expected to sustain exchange rate stability, while external reserves is projected to increase to US$51.04 billion,” the Central Bank of Nigeria (CBN) said in its macroeconomic outlook on Tuesday.
According to the Abuja-based bank, the external reserves is estimated to end 2025 at $45.01 billion — that’s a $6.03 billion increase over the next 12 months, compared with the $40.19 billion it closed in 2024.
Stronger reserves mean a firmer naira, a condition that would further boost investor confidence and help build corporates’ balance sheets, especially those with an import focus. That will cut foreign exchange losses and improve profitability.
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Africa’s most populous economy is witnessing a turnaround in its economy after years of currency volatility, depletion of FX reserves, and stunted growth.
With growth already picking up in 2025, the apex bank sees the economy expanding, projecting 4.49 percent annual GDP next year, compared with an estimated 3.89 percent by the end of 2025 and 3.38 percent last year.
“The projection is hinged on continued gains from broad-based structural reforms and a gradually easing monetary policy stance. These are expected to further improve the business environment, enhance investor confidence, and support private-sector-led growth,” the CBN wrote in its report.
“The growth momentum is also anticipated to be complemented by increased production and investments in the oil sector, supported by improved security surveillance, alongside gains from enhanced domestic refining capacity.”
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CBN sets 13% inflation target to slow prices
The CBN said it would be adopting an inflation targeting framework that would cool prices to 13 percent in the next two years as part of a broader measure to tame stubbornly high inflation and enhance purchasing power.
It said the framework, which would be done in phases, is designed to enhance policy credibility, reinforce the central bank’s commitment, and guide expectations across government, markets, and the public, noting that transitional inflation targets are set to decline from 18.5 percent in 2025 to 13 percent by 2027.
“Inflation is expected to continue its downward trend in 2026. The inflation outlook is predicated on continued stability in the foreign exchange and energy markets, the lagged effect of previous rate hikes, and improved policy coordination.”
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According to the CBN, the anticipated moderation would be driven by declining food and PMS prices.
The expected deceleration in PMS prices, the bank explained, would be driven by the increasing competition within the midstream segment of the oil industry. While the anticipated faster decline in food prices is expected to drive the slower pace of inflation.
Nigeria’s inflation currently stands at 14.45 percent in November, marking the eighth consecutive decline this year and the lowest since 2020, before the rebasing of the consumer price index.