Nigeria's central bank expects the economy to expand by 4.17% this year, Governor Olayemi Cardoso said on Thursday, driven by ongoing reforms and stabilising inflation.

Reforms instituted by President Bola Tinubu in 2023, including scrapping a subsidy on petrol and twice devaluing the naira currency, have stoked inflation in Africa's most populous country.

Inflation, currently at 34.8%, is expected to decline as the reforms starts to yield results, Cardoso said at a conference.

He also said foreign exchange reserves were seen rising gradually, driven by increased oil production. Oil output is forecast to reach 2.3-million barrels per day by mid-year, Cardoso said.

Nigeria recorded foreign exchange inflows exceeding $6-billion in 2024, Cardoso said, taking its foreign exchange reserves to more than $40-billion.

Cardoso said the central bank's priority remained maintaining price stability and bolstering market confidence. To this end, the bank aims to enhance transparency and efficiency within the foreign exchange market.

"With limited opportunities for FX arbitrage, we expect that there will be more appetite for real sector development," he added.