FX Reserves Surge to Seven-Year High, Raising Fresh Hope for the Naira in 2026
- Nigeria's external reserves rose to a five-year high, reflecting improved foreign exchange stability and naira outlook
- CBN Governor attributes reserve gains to FX reforms and increased transparency in the foreign exchange market
- Despite recent volatility, economists believe naira stability is expected as reserve quality improves through 2026
Nigeria’s external reserves expanded by $4.39bn between December 23, 2024, and December 23, 2025, offering fresh optimism about the country’s foreign exchange stability and the outlook for the naira.
Data sourced from the Central Bank of Nigeria shows that reserves climbed by about 10.75 per cent within the period.
Source: Getty Images
As of December 23, 2025, Nigeria’s FX reserves stood at $45.24bn, up from $40.85bn recorded on the same date in 2024.
Although the reserves experienced fluctuations earlier in the year, the overall trend in the second half of 2025 points to steady recovery and renewed investor confidence.
Early-year decline driven by debt servicing
The year began on a cautious note for the reserves. After closing 2024 at $40.87bn, external buffers dipped to $39.72bn in January 2025 and fell further to $38.41bn in February.
The slide continued in March and April, when reserves dropped to $38.30bn and $37.93bn, respectively.
The CBN attributed the early decline largely to increased foreign debt-servicing obligations.
Official data showed that Nigeria spent $540m on debt service in January and another $276m in February, bringing total payments in the first two months of the year to $816m.
Despite the pressure, the apex bank maintained that the fundamentals remained solid. The CBN said the first-quarter weakness reflected seasonal adjustments and heavy interest payments, adding that reserves were expected to improve as the year progressed.
Second-half rally lifts reserves above $45bn
After closing the first half of the year at $37.21bn, following continued interventions in the FX market, reserves began a sustained climb from July.
They rose to $39.35bn in July, crossed the $40bn mark in August, and closed September at $42.35bn.
The rally continued into the final quarter, with reserves rising to $43.19bn in October and $44.66bn in November.
Although minor pullbacks were recorded in mid-December, some of those losses were recovered, leaving the reserves at $45.24bn by December 23.
In November, the CBN disclosed that reserves had hit $46.7bn as of November 14, their strongest level in seven years, marking the highest point since 2018.
CBN links gains to FX reforms and credibility
CBN Governor Olayemi Cardoso linked the turnaround to the clearing of the FX backlog and improved transparency in the foreign exchange market.
Speaking at the inaugural CBN Governor Annual Lecture Series in Lagos, on Wednesday, December 2025, Cardoso said credibility and trust were key to attracting long-term capital.
He noted that consistent policy actions and keeping commitments had helped restore investor confidence, which in turn supported reserve accretion.
Experts see support for naira, urge caution
Economists believe stronger reserves could ease pressure on the naira in 2026 by improving FX supply. However, some analysts remain cautious about the quality of inflows.
Managing Director of Financial Derivatives, Bismarck Rewane, said the recent build-up must be viewed alongside Nigeria’s debt profile, noting that Eurobond issuance played a role.
He also warned that diaspora remittances, a growing FX source, could face risks from job losses abroad.
Analysts at Afrinvest Research praised the CBN’s FX market reforms, noting that reserves now provide nearly 11 months of import cover.
Still, they cautioned that the approaching pre-election period could make investors more risk-averse, testing the sustainability of the gains.
Janet Ogochukwu, senior banker and economist, in an exclusive chat with Legit.ng disclosed that the reserves growth has provided buoyancy to naira, despite recent volatility in the FX market.
Source: Getty Images
"The recent volatility is caused by seasonal changes due to the pressure of Christmas. When the dust settles, the naira will be better off, she said.
"Economists see the current situation as temporary due to the yuletide period. So, the naira will stabilise in the long run."
Naira extends gains against US dollar
Legit.ng earlier reported that the naira has strengthened against major currencies on Tuesday, December 23, extending its recent gains despite a sharp decline in foreign exchange (FX) inflows.
At the Nigerian Foreign Exchange Market (NAFEM), the naira rose by N6.57, or 0.45%, to N1,449.99 per US dollar from Monday’s N1,456.56.
While in the official market, the currency also gained N1.30 against the British Pound to N1,956.03/£1 and rose N2.94 against the euro to N1,707.65/€1.
Source: Legit.ng
