Nigeria’s foreign exchange reforms under the Central Bank of Nigeria (CBN) are starting to deliver tangible results, pushing gross external reserves to a 13-year high of $50.45 billion as of mid-February 2026 while helping the naira hold steadier ground in recent months.
CBN Governor Olayemi Cardoso highlighted the milestone during the latest Monetary Policy Committee briefing in late February, noting that the reserves now cover nearly 9.68 months of imports for goods and services a solid buffer that signals growing confidence in the country’s external position.
This marks a clear turnaround from earlier challenges. Reserves had climbed from $40.19 billion at the end of 2024 to $45.71 billion by December 2025, adding about $5.52 billion in a single year. The continued build-up into early 2026 stems from stronger export earnings (especially from oil), better remittance flows from Nigerians abroad, and the effects of ongoing FX market tweaks aimed at greater efficiency and transparency.
On the currency front, the naira has shown signs of stabilization and modest gains. In February 2026, it appreciated month-on-month in the official Nigerian Foreign Exchange Market (NAFEM), closing around N1,368.50 per dollar after opening the month near N1,384.50. This improvement came despite some end-of-month fluctuations, and it outperformed earlier forecasts like one from investment firm Afrinvest, which had pegged the 2026 average at roughly N1,431 per dollar based on models factoring in real effective exchange rates, money supply, reserves ratios, budget benchmarks, and purchasing power parity.
Afrinvest’s outlook had assumed factors such as policy alignment on capital gains tax to attract foreign portfolio investors, steadier (or higher) crude oil output thanks to better security and investments, reduced speculation due to the CBN’s Electronic Foreign Exchange Matching System (launched in late 2024), and lower import demand as domestic production of petrol, related fuels, and fertilizers ramps up cutting what used to be a hefty chunk of monthly FX outflows.
The reforms themselves starting with the 2023 unification of exchange rates initially triggered a sharp depreciation as hidden distortions from multiple windows and controls came to light. Importers dealt with soaring costs, inflation spiked, and investor sentiment took a hit. But over time, the shift toward a more market-driven system, combined with tighter liquidity management and favorable external tailwinds, has helped narrow gaps between official and parallel market rates while boosting overall liquidity.
Looking ahead, the CBN projects reserves could exceed its own $51.04 billion target for 2026, driven by anticipated higher oil revenues, potential sovereign bond issuances, sustained remittances, and the positive impact of expanded domestic refining particularly from facilities like the Dangote refinery scaling up capacity.
That said, the gains aren’t ironclad. Officials and analysts caution that stability could still face tests from global shocks, swings in capital flows, or persistent domestic inflation pressures. The structural test remains whether the FX market has truly become self-sustaining or if it continues to rely heavily on controlled liquidity and supportive commodity prices.
For now, though, the combination of rising reserves, a firmer naira trajectory, and deliberate policy moves paints a picture of cautious optimism one where Nigeria’s external buffers are strengthening and the currency story is shifting from crisis mode toward something more resilient. Market participants will be watching closely to see if these trends hold through the rest of the year.
