Nigeria’s foreign-exchange reserves are on track to climb toward $51 billion this year, underscoring a steady recovery in external buffers even as global shocks and domestic political risks test the durability of recent reforms.
At $48.44 billion as of April 23, the country’s reserves cover more than 12 months of imports, according to analyst estimates, reinforcing the Central Bank of Nigeria’s (CBN) view that its year-end target of $51.04 billion remains achievable despite headwinds from the Middle East crisis.
The build-up reflects a mix of improved FX inflows, stronger oil receipts, rising diaspora remittances through formal channels, and renewed foreign portfolio investment following market reforms introduced by the Olayemi Cardoso-led Central Bank.
Reserves have steadily strengthened since 2025, when they rose from about $40.8 billion at the start of the year to roughly $45.5 billion at year-end, marking a turnaround from the volatility that followed the early phase of Nigeria’s new foreign-exchange regime.
The current level signals stronger buffers for import cover and currency stability, even as the economy faces macroeconomic pressures and approaches a general election cycle historically associated with policy uncertainty and capital flow volatility.
Data from the Central Bank point to improved foreign-exchange management and sustained inflows since the reforms began, helping stabilise the naira and restore confidence in financial markets.
In its 2026 macroeconomic outlook, the CBN said reserves would be supported by higher oil earnings, increased bond issuance, sustained diaspora inflows, FX market reforms, and expanding domestic refining capacity.
“The external reserves are projected at $51.04 billion in 2026, compared with $45.01 billion in 2025,” the bank said. “The external reserves are expected to be boosted by reduced pressure in the FX market based on the anticipated rise in oil earnings, sovereign bond issuance, and diaspora remittance inflow.”
Analysts say the trajectory is broadly positive, citing improved policy credibility and investor sentiment. Still, they caution that maintaining the pace of reserve accumulation through an election year will depend on fiscal discipline and consistency in reform implementation.
“While reserves can be sustained in the short term, maintaining this momentum throughout an election year will depend on discipline,” analysts said, noting that Nigeria’s election cycles have historically triggered FX demand pressures, policy uncertainty, and capital reversals.
Uneven impact of the Middle East shock
Nigeria’s position as an oil exporter may help shield it from the worst effects of the Middle East conflict, according to Kristalina Georgieva, managing director of the International Monetary Fund (IMF).
Countries able to maintain oil and gas exports without disruption are likely to face fewer headwinds than import-dependent economies, she said, even as the global economy absorbs the shock.
A report titled “How the Middle East War Has Affected Oil Exporters and Importers” highlights the uneven nature of the crisis, with exposure shaped by whether countries are net importers or exporters of energy and by the degree of policy flexibility available to respond.
The conflict has already disrupted oil and gas flows and darkened the global economic outlook, cutting global oil supply by about 13 percent and liquefied natural gas flows by roughly 20 percent.
“It is large, global, and asymmetric,” Georgieva said in a curtain-raiser speech for the IMF Spring Meetings. “It is large because the world’s daily oil flow is cut by some 13 percent, and its LNG flow by some 20 percent. It is global because all of us are now paying more for energy… and it is asymmetric because its impact depends on proximity to the conflict, whether you are an energy exporter or importer, and your policy space.”
The shock is rippling through global supply chains, triggering refinery disruptions, shortages of refined products such as diesel and jet fuel, and dislocations in transport, trade, and tourism.
It is also worsening food insecurity, with an additional 45 million people affected, bringing the global total to more than 360 million, amid rising fertiliser costs and logistics constraints.
Naira stability gains ground
The naira has shown signs of stabilising, trading at about N1,358 per dollar in the official market and around N1,395 in the parallel market.
Aminu Gwadabe, president of the Association of Bureaux De Change Operators of Nigeria (ABCON), said the currency has remained stable across markets for several months, marking a break from years of volatility.
Bismarck Rewane, managing director of Financial Derivatives Company, estimates the naira’s fair value at about N1,257 per dollar using purchasing power parity, suggesting the currency is undervalued by roughly 11 percent.
He said exchange rates typically converge toward PPP-implied levels over a five-year horizon, placing the equilibrium rate at about N1,256.79 per dollar based on current estimates.
Reforms driving reserve growth
Stakeholders say the improvement in reserves reflects deeper structural shifts rather than a simple rebound in oil earnings.
Muda Yusuf, chief executive of the Centre for the Promotion of Public Enterprise, said the gains are largely anchored on reforms that have boosted confidence and diversified FX inflows.
“The reserves are not so much coming from oil,” he said. “My sense is that they are coming largely from outside oil, Foreign Direct Investment (FDI), portfolio flows, diaspora remittances, non-oil exports. Quite a lot is happening outside traditional sources of forex.”
He added that the outlook remains positive as long as reform momentum is sustained, even in an election year.
Other analysts echoed that view but warned that sustaining reserve growth will require limiting FX interventions, restraining fiscal spending pressures, and avoiding policy reversals.
Reform payoff and FX liquidity outlook
FX reforms introduced by the Cardoso-led Central Bank, alongside government policies to boost local production and reduce import dependence, have strengthened macroeconomic stability and eased pressure on the currency.
The CBN governor said the rise in reserves reflects a rebound in Nigeria’s foreign currency buffers, driven by efforts to stabilise the exchange rate and rebuild investor confidence.
The increase has come despite stronger market intervention by the Central Bank, external debt servicing obligations, and relatively weak oil receipts.
Analysts expect FX liquidity from both domestic and external sources to remain supportive of the naira in the near term, underpinned by improved market confidence.
They also project headline inflation to ease further in July, supported by moderating food prices and stable core inflation.
“Specifically, we anticipate the slowdown in food prices to be supported by improved market supply from early green harvests and the relative stability of the naira,” analysts said. “Core inflation is projected to remain broadly stable, supported by reduced exchange rate pass-through and steady energy prices.”
Multiple FX channels supporting inflows
The Central Bank has stepped up efforts to diversify FX sources, rolling out measures to boost dollar inflows and improve access for manufacturers and retail users.
These include initiatives to strengthen diaspora remittance channels, licensing new International Money Transfer Operators, implementing a willing buyer–willing seller FX model, and ensuring timely naira liquidity for IMTOs.
The measures have simplified dollar inflow channels across the FX value chain, contributing to sustained reserve accretion and exchange rate stability.
Diaspora remittances, estimated at $23 billion annually, remain a key pillar of FX inflows, with the CBN targeting a significant increase in formal remittance receipts.
With continued efforts to strengthen confidence in the FX market, deepen financial inclusion, and maintain price stability, remittance inflows are expected to rise further.
The trajectory of reserves and the naira will ultimately hinge on policy discipline, reform continuity, and external conditions, as Nigeria navigates a fragile but improving macroeconomic landscape.
Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy.
