The naira appreciated across the foreign exchange (FX) markets on Monday as Nigeria’s external reserves rose to an eight-year high of $46.01 billion, supported by improved liquidity conditions.
Data from the Central Bank of Nigeria (CBN) showed that the local currency strengthened marginally at the Nigerian Foreign Exchange Market (NFEM), with the dollar quoted at N1,418.95, representing a gain of N2.68 from N1,421.63 recorded on Friday.
In the parallel market, commonly referred to as the black market, the naira also appreciated slightly, closing at N1,485 to the dollar, gaining N2 from the N1,487 quoted last week, according to street traders.
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Nigeria’s external reserves have maintained a steady growth trajectory, rising to an eight-year high of $46.01 billion as of January 22, 2025, according to data from the apex bank. The last time the country’s foreign currency reserves reached a similar level was on August 24, 2018, when they stood at $46.09 billion.
The CBN’s outlook assumes an average Nigerian Foreign Exchange Market exchange rate of N1,451.63 per dollar in the fourth quarter of 2025 and N1,400 per dollar in 2026. This projection is supported by expectations of improved FX market efficiency, higher capital inflows, a current account surplus, and a broad-based economic recovery.
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Further details from the CBN’s external reserves data showed that Nigeria’s gross official reserves increased by $834.2 million month-on-month, closing the 2025 financial year at $45.5 billion. On a year-on-year basis, reserves posted a stronger gain of $4.6 billion.
According to analysts at FBNQuest, the performance of the reserves in 2025 reflected a tale of two halves. In the first half of the year, reserves came under significant pressure due to sizeable external debt service obligations, declining by about $3.7 billion to $37.2 billion by the end of June 2025.
However, reserves rebounded strongly in the second half of 2025, supported by sustained inflows from offshore investors attracted by an increasingly favourable domestic environment, alongside improved FX receipts. Additional support came from diaspora remittances and proceeds from debt issuances amounting to $2.4 billion, part of which was used to refinance the $1.2 billion Eurobond maturity in November 2025. Consequently, stronger external buffers played a key role in maintaining a relatively stable FX environment throughout the year.
Although foreign portfolio inflows (FPIs) ended the year on a subdued note, they still recorded a strong full-year performance. Inflows from offshore investors nearly doubled to $16.9 billion in 2025, compared with $8.6 billion recorded in 2024.
On the crude oil production front, Nigeria recorded an improvement in 2025, with average output rising to 1.45 million barrels per day excluding condensates, and 1.64 million barrels per day including condensates. This represents an increase from the 2024 averages of 1.35 million barrels per day and 1.56 million barrels per day, respectively.
Despite the improvement, analysts expect the positive impact of FX crude receipts on external reserves to be constrained by softer global oil prices in 2025, driven by oversupply conditions and weakening global demand.
Although reported with a lag, the CBN’s Quarterly Statistical Bulletin showed that remittance inflows through International Money Transfer Operators remained resilient at $2.1 billion as of the end of June 2025, only slightly below the $2.3 billion recorded in the corresponding period of the previous year.
Nigeria’s total external reserves covered 14.1 months of merchandise imports over the 12 months to June 2025, or 9.5 months when imported services were included.
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The country’s official external reserves have also started the new year on a positive trajectory, extending the momentum from 2025. Year to date, gross official reserves have increased by $335.8 million to $45.9 billion as of January 16, 2025.
Looking ahead to 2026, analysts at FBNQuest said despite expectations of softer global oil prices, continued FX reserve accumulation is anticipated, supported by resilient remittance inflows, strong offshore investor participation, and steady contributions from export-related FX receipts.