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 with the News Agency of Nigeria (NAN) on Sunday in Abuja.
According to him, accretion to 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 stabilise the exchange rate,” he said.
He, however, raised concerns that the increase in the nation’s foreign reserves had been largely on account of temporary FX inflows such as Foreign Portfolio Investments (FPIs) and foreign loans.
He said that 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 (FDIs) ,” he said.
NAN reports that the CBN recently revealed that the NFER stood at 23.11 billion dollars at the end of 2024, their highest level in three years.
The apex bank said that the development signalled a major improvement in the country’s external financial position.
It said that the NFER, which adjusts gross reserves to account for near-term liabilities such as currency swaps and forward contracts, stood at 3.99 billion dollars at the end of 2023.
According to the CBN Governor, Yemi Cardoso, the improved position was due to substantial reduction in short-term foreign exchange liabilities, notably swaps and forward obligations.
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,” Cardoso said.
He said that Gross external reserves also climbed to 40.19 billion dollars at the end of 2024, up from 33.22 billion dollars 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,” Cardoso said. (NAN)
