Nigerian Naira anchors as foreign reserves hit 8-year peak of $47b

By: Chidozie Nwali

Nigeria’s macroeconomic stabilization strategy reached a pivotal milestone on Monday as gross external reserves officially crossed the $47 billion threshold, providing a massive buffer that effectively “shields” the local currency against global and local volatility.

According to the latest data from the Central Bank of Nigeria (CBN), the reserves closed Monday, at approximately $47.03 billion. This represents a staggering 14.5% increase from the $40.2 billion recorded at the end of 2024, placing Nigeria’s import cover at its strongest level since 2018.

The rapid accretion of $5.8 billion in just over 14 months is being attributed to reforms being carried out at the CBN and also in the Nigerian economy.

The full-scale operation of the Dangote Refinery (now eyeing a 1.4 million bpd capacity) has drastically reduced the monthly FX outflow previously required for fuel imports.

Strategically, the CBN’s Electronic Foreign Exchange Matching System (EFEMS) has eliminated the “opaque” trading windows of the past, encouraging over $2 billion in monthly diaspora remittances to flow through official channels.

With the Monetary Policy Rate (MPR) holding steady at 27.00%, foreign portfolio investors (FPIs) have flooded back into Nigerian sovereign bonds, seeking the highest real returns in Sub-Saharan Africa.

The impact on the Naira has been “monumental,” according to market analysts. On Monday, the Naira appreciated by 0.9% at the Nigerian Foreign Exchange Market (NFEM), closing at N1,354.26/S$1—its strongest level in two years.

The CBN in its macroeconomics outlook remains bullish, projecting that reserves will hit $51.04 billion by December 2026.

With inflation cooling to 15.15% and reserves at an eight-year high, the “Naira-stability” narrative appears to be transitioning from a temporary reprieve to a structural reality.