Nigeria's foreign exchange reserves have surged to their highest level in seven years, injecting fresh optimism into the nation's economic outlook and raising hopes for a more stable Naira by 2026. The significant accumulation marks a pivotal turnaround for the Central Bank of Nigeria's (CBN) external buffers.
Reserves Climb to $45.24 Billion, Marking a Strong Recovery
Official data from the Central Bank of Nigeria reveals that the country's external reserves stood at $45.24 billion as of December 23, 2025. This represents a substantial increase from the $40.85 billion recorded on the same date in 2024, translating to a growth of $4.39 billion, or approximately 10.75%, over the one-year period.
The journey to this peak was not without volatility. The year began with reserves under pressure, declining from $40.87 billion at the end of 2024 to a low of $37.93 billion in April 2025. The CBN attributed this early dip primarily to increased foreign debt-servicing obligations, which totaled $816 million in just January and February alone.
However, a decisive rally commenced in the second half of the year. Reserves began a steady climb from July, crossing the symbolic $40 billion mark in August and reaching $42.35 billion by September. The upward trajectory continued into the final quarter, with the reserves hitting a notable seven-year peak of $46.7 billion in mid-November 2025, before settling at the December figure.
CBN Credits FX Reforms and Policy Credibility for Turnaround
CBN Governor, Olayemi Cardoso, has directly linked the impressive reserve build-up to the bank's sustained foreign exchange market reforms and enhanced transparency. Speaking at the inaugural CBN Governor Annual Lecture Series in Lagos in December 2025, Cardoso emphasized that credibility and trust were fundamental in attracting long-term capital inflows.
He noted that consistent policy actions and a commitment to meeting obligations, such as clearing the backlog of FX commitments, have been instrumental in restoring investor confidence. This renewed confidence, according to the Governor, is the core driver behind the recent accretion to the reserves.
Economists See Naira Support but Advise Cautious Optimism
The bolstered reserves are widely seen as a critical buffer that could ease pressure on the Nigerian Naira in the coming year by improving foreign currency supply. Analysts at Afrinvest Research highlighted that the current reserve level now provides nearly 11 months of import cover, a significant improvement for the economy.
However, leading economists urge a measured perspective. Bismarck Rewane, Managing Director of Financial Derivatives, pointed out that the quality of inflows must be considered alongside Nigeria's debt profile, noting that recent Eurobond issuances contributed to the reserve growth. He also cautioned that diaspora remittances, a growing source of FX, could face risks from potential job losses in key foreign economies.
Senior banker and economist, Janet Ogochukwu, in an exclusive discussion, stated that the reserves growth has provided buoyancy for the Naira. She attributed recent market volatility to seasonal pressures from Christmas demand, expressing confidence that the Naira will stabilize once the seasonal dust settles.
Supporting this view, the Naira extended its gains on December 23, 2025, appreciating by 0.45% to N1,449.99 per US dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), despite reports of a decline in FX inflows.
While the reserve milestone offers a strong foundation, analysts agree that maintaining the gains will require continued prudent management, especially as the nation approaches a pre-election period that historically makes investors more risk-averse. The focus now shifts to whether this momentum can be sustained to deliver the promised stability for the Naira in 2026.
