CBN: $51bn Year-End FX Reserves Target Possible Despite Headwinds
Nigeria’s external reserve position is a key indicator of the country’s ability to defend the naira and meet its external obligations. Analysts estimates that at $48.44 billion on April 23rd, Nigeria’s external reserves presently cover over 12 months imports. The Central Bank of Nigeria (CBN) projects $51.04 billion reserves position by year-end despite headwinds triggered by Middle East crisis. Factors driving reserves build up include improved FX inflows, higher oil receipts, increased remittances through official channels and renewed interest from foreign portfolio investors following FX market reforms instituted by the Olayemi Cardoso-led Central Bank of Nigeria (CBN).
Nigeria’s external reserves have hit $48.44 billion on April 23, consolidating the steady growth recorded since 2025. The strong reserves position will continue to bolster exchange rate and promote financial sector stability.
This will happen despite macroeconomic pressures and headwinds. The current reserves position signals stronger buffers for import cover and currency stability, reflecting steady inflows and improved foreign exchange management since the forex reforms began, as the country prepares for a general election.
The CBN data also suggests a notable turnaround from the volatility experienced during the early phase of the new forex regime, with the reserves closing at about $45.5 billion in 2025, having opened the year at roughly $40.8 billion.
The CBN had, in its 2026 Macroeconomic Outlook for Nigeria, projected that Nigeria’s external reserve would rise to $51.04 billion in 2026, supported by stronger oil earnings, foreign exchange (FX) market reforms, and improved external inflows.
The apex bank said the outlook reflects higher oil revenues, increased bond issuance, sustained diaspora remittances, FX market reforms, and expanded domestic refining capacity.
The CBN stated, “The external reserves is projected at US$51.04 billion in 2026, compared with US$45.01 billion in 2025. The external reserves is 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 have expressed optimism that the steady growth of Nigeria’s external reserve for several months will be sustained this year.
They said that the various reforms by the government have brought stability and confidence, thereby causing improvement in the country’s external reserves.
They, however, noted that while the reserves can be sustained in the short term, sustaining the momentum throughout the election year will depend on discipline on the part of the government.
Nigeria faces lower risks over M’East crisis
Nigeria and other countries able to export oil and gas without hitches despite the ongoing Middle East crisis will face the smallest headwinds or risks, the Managing Director, International Monetary Fund (IMF), Kristalina Georgieva has said.
A report: “How the Middle East War Has Affected Oil Exporters and Importers”, released at the weekend, explained her position, highlighting that countries directly hit by the conflict, including major oil and gas exporters in the Middle East, bear the brunt of the impact.
The report explained that countries face vastly different exposure to higher oil prices and supply uncertainty, shaped by whether they import or export, and how much policy space they have to respond.
Already, the war in the Middle East has disrupted oil and gas flows and darkened the global economic outlook.
“So, do oil-importing nations where imports loom large as a share of gross domestic product. How severe that burden becomes for these importers depends critically on their policy space, proxied in the charts below by their sovereign credit ratings,” the report said.
Explaining that most countries are net oil importers, the Fund said the war’s direct hits have fallen heavily on exporters, adding that the shock is global, but the burden is uneven.
In her Spring Meetings curtain raiser speech, Georgieva, said a resilient world economy is being tested again by the war in the Middle East.
“The conflict has caused considerable hardship around the globe. My heart goes out to all people affected by this war and all wars.
Our focus remains on how best to weather this latest shock and ease the pain on economies and people. This requires understanding the nature of the shock, the channels through which it affects the economy, the size of the impact, and the policies that can mitigate it,” she said.
According to her, the global economy was hit by a supply shock that is large, global, and asymmetric: “It is large because the world’s daily oil flow cut by some 13 percent, and its LNG flow by some 20 percent; It is global because all of us now paying more for energy and with supply chains disrupted across the world; 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. As always, a negative supply shock pushes prices up,” she said.
She disclosed that the supply interruptions have had—and will for some time continue to have—ripple effects, such as: Oil refinery disruptions given the need to maintain minimum flow rates, with warning lights flashing red in many far-flung places; Shortages of refined products including diesel and jet fuel, which have disrupted transportation, trade, and tourism in a world more interconnected than ever,” among others.
“Also being impacted is the food insecurity for another 45 million people given the transport issues—taking the total number of people in hunger to over 360 million—with the problem potentially worsening over time because of higher fertilizer prices; and supply chain disruptions given industrial dependencies such as on sulfur, helium for silicon chipmaking and MRI imaging, and naphtha for plastics,” she said.
Things looking up for naira
The naira which currently exchanges at N1,358 to dollar at the official market exchanges at N1,395 to dollar at the parallel market.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the naira has remained stable across market for several months, ending years of volatility in the market.
Additionally, Managing Director of Financial Derivatives Company (FDC), Bismarck Rewane, estimated the fair value of the naira at about N1,257 to the US dollar.
Rewane posits that the local currency is undervalued by approximately 11 per cent when assessed using the purchasing power parity (PPP) model.
Rewane made the submission during his keynote address at the 2026 Economic Outlook organised by the Association of Corporate Treasurers of Nigeria (ACTN), where he anchored the session and offered a detailed analysis of the structural and cyclical factors influencing Nigeria’s exchange-rate movements.
He noted that currencies typically converge towards their PPP-implied values over a five-year horizon.
According to him, the appropriate exchange rate based on current PPP estimates stands at N1,256.79 to the dollar, reinforcing the view that the naira remains below its fair valuation level.
What stakeholders are saying
The founder/Chief Executive Officer of the Centre for the Promotion of Public Enterprise (CPPE), Dr Muda Yusuf, hinted at a positive outlook for Nigeria’s external reserves as he does not see anything derailing the forex and fiscal reforms that have brought about stability and improvement in external reserves.
Yusuf said, ‘’Well, the outlook for me is positive because I don’t see anything derailing these reforms [forex reform, fuel subsidy etc. It is these reforms that have brought about stability. And it’s this stability that has inspired confidence. It is the confidence that has allowed the improvement in the reserves. The reserves are not so much coming from oil, though. I don’t have the full breakdown. But my sense is that the reserves are coming from largely outside the oil – FDI, portfolio, diaspora flows, non-oil exports etc. Quite a lot is happening outside traditional sources of forex.
“So, those things are anchored on reforms. For as long as that is happening and I don’t see that changing, even with the so-called election year or whatever, I don’t see anything changing that in any drastic way.’’
Other analysts said the growth in the external reserves can only be sustained in 2026 if the CBN avoids excessive FX intervention, fiscal authorities are restrained from spending pressures and the FX reforms are not reversed.
They said, ‘’Historically, election cycles in Nigeria tend to introduce policy uncertainty, FX demand pressure, and capital flow reversals. So, while reserves can be sustained in the short term, maintaining this momentum throughout an election year will depend on discipline.
The reforms payoff continues
The FX reforms, instituted by the Olayemi Cardoso-led CBN, new policies instituted by the Federal Government to boost local production, reduce forex demand pressure, and lessen domestic prices have been instrumental to macroeconomic stability.
The expectations are that the apex bank sustains the forex reforms while the fiscal authority strengthens efforts at enhancing FX earnings, especially from gas, oil and non-oil exports.
CBN Governor explained that the rise in foreign reserve marked a significant rebound in Nigeria’s foreign currency buffers amid ongoing efforts to stabilize the exchange rate and rebuild investor confidence. The reserves spike happened despite relatively stronger CBN market intervention this year and external debt servicing as well as weak oil receipts.
Looking ahead, the analysts expect robust FX liquidity from both foreign and local sources, driven by strong market confidence, to continue supporting naira stability in the near term.
Looking ahead, analysts expect headline inflation to ease further in July, supported by a moderation in both food and core inflation components.
“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, which is expected to reduce pressure on imported food prices. Similarly, core inflation is projected to remain broadly stable, supported by a reduced exchange rate pass-through effect and steady energy prices,” they said.
Multiple FX sources activated
The CBN under Cardoso is cultivating multiple FX sources to increase dollar inflows, boost dollar access to manufacturers and retail end users.
From moves to improve diaspora remittances through new product development, the granting licenses to new International Money Transfer Operators (IMTOs), implementing a willing buyer-willing seller FX model, and enabling timely access to naira liquidity for IMTOs, the apex bank has simplified dollar-inflow channels for authorized dealers and other players in the value chain.
The move has led to substantial accretion to the gross FX reserves and supported the stability of the naira. Given that FX inflows to the economy are strategic in achieving monetary and fiscal policy stability, the CBN under Cardoso puts in a lot of efforts in attracting more inflows into the economy.
Diaspora remittances to Nigeria, estimated at $23 billion annually remain a reliable source of forex to the domestic economy. There are also other sources and policies that are being explored by the apex bank to keep dollar inflows coming.
The CBN’s initiatives have supported continued growth in these inflows, aligning with the institution’s objective of doubling formal remittance receipts within a year.
The remittances in the economy is expected to increase based on CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth.
