CBN FX reforms lift Nigeria’s reserves to $50.45bn and stabilise the naira, though analysts warn gains remain vulnerable to inflation and external shocks

Governor of the Central Bank of Nigeria, Olayemi Cardoso, said foreign exchange reforms introduced since 2023 have strengthened Nigeria’s external position, pushing reserves to $50.45bn and helping stabilise the naira across market segments.

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The reforms, which unified exchange rates and dismantled multiple foreign exchange windows, were initially followed by a sharp depreciation of the currency as long-standing distortions surfaced.

However, recent data suggests the market is gradually adjusting, with improved liquidity and stronger inflows supporting the local currency.

The naira closed February 2026 at N1,368.50 to the dollar in the official market, compared with N1,384.50 at the beginning of the month. The improvement followed a similar trend in January, when the currency strengthened from N1,431 to N1,391.

The recovery has coincided with rising external reserves.

Cardoso disclosed at the end of the apex bank’s 304th Monetary Policy Committee meeting in Abuja that Nigeria’s gross reserves had climbed to $50.45bn as of February 16, the highest level in more than a decade and equivalent to 9.68 months of import cover for goods and services.

The reserve growth reflects a steady increase from $40.19bn at the end of 2024 to $45.71bn at the end of 2025. The apex bank attributed the improvement to stronger export earnings, diaspora remittances and renewed investor confidence following policy reforms.

Nigeria’s reserve outlook also appears stronger than earlier projections by Afrinvest West Africa Limited, which estimated the naira would average around N1,431 to the dollar in 2026.

Analysts at the investment house had based the projection on multiple valuation models, including purchasing power parity and reserve-based assessments.

According to the firm, continued reforms and improved domestic refining capacity could help reduce the country’s import bill, particularly for fuel products that previously accounted for a large share of foreign exchange demand.

Domestic refining is expected to play a significant role. Expansion plans by the Dangote Refinery could boost output capacity to 700,000 barrels per day and potentially double that level in the medium term, easing pressure on foreign exchange used for fuel imports.

Despite the improvement, analysts say the stability is still fragile. Liquidity management by the central bank remains a key factor supporting the currency, and the exchange rate continues to react to changes in capital flows and fiscal operations.

Managing Director of Afrinvest, Ike Chioke, noted in a briefing to investors that the naira is likely to trade within a similar range in the near term, supported by central bank liquidity operations and improved refining capacity.

Similarly, President of the Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, said the naira had remained relatively stable for several months, although stability does not necessarily mean the market has reached equilibrium.

Beyond headline figures, the composition of reserves is also improving.

Cardoso revealed that Nigeria’s net foreign exchange reserves rose to $34.80bn at the end of 2025, up sharply from $3.99bn in 2023. Net reserves exclude short-term liabilities and provide a clearer picture of funds available to defend the currency.

The governor said the increase reflected improved transparency in FX management and stronger investor confidence.

The Chief Executive Officer of the Centre for the Promotion of Public Enterprise, Muda Yusuf, described the outlook as positive, arguing that reforms across the foreign exchange market and the removal of fuel subsidies had restored confidence.

According to him, the reserve growth is being supported not only by oil earnings but also by foreign direct investment, portfolio flows and diaspora transfers.

Other analysts, however, warn that the gains could be vulnerable to global shocks, volatile capital flows and domestic inflationary pressures.

Election cycles have historically created policy uncertainty in Nigeria, increasing demand for foreign exchange and raising the risk of capital outflows.

The reforms form part of a broader economic adjustment programme launched by the administration of Bola Tinubu in 2023. Measures included liberalising the foreign exchange market, ending central bank financing of fiscal deficits and clearing more than $7bn in FX backlog owed to investors.

Nigeria has since returned to international capital markets and secured improved ratings from global agencies, reflecting renewed investor optimism.

Still, economists caution that sustaining the current trajectory will require disciplined fiscal policy and consistent reform signals.

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The challenge for policymakers, analysts say, is no longer introducing reforms but maintaining them when fiscal pressures and political cycles intensify.