Nigeria’s foreign exchange reserves have declined by approximately $850 million over the past three weeks, falling from $50.03 billion on March 11, 2026, to $49.18 billion as of April 1, 2026, according to data from the Central Bank of Nigeria (CBN).
The drop has reversed a nine-month upward trend that began in July 2025, raising concerns among market participants about sustained pressure on the country’s external buffers.
Forex traders and analysts attribute the decline to a combination of factors, including increased government spending linked to the approaching election cycle, sustained interventions by the CBN to stabilise the naira, and capital flow volatility as some foreign investors repatriate funds or adopt a more cautious stance amid global interest rate movements.
Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), said the CBN’s efforts to manage exchange rate volatility through dollar injections have contributed to the drawdown. He also pointed to payments on foreign debt obligations and election-related fiscal pressures as additional factors exerting strain on reserves.
“Capital flow volatility can lead to sudden outflows, while election-year pressures from increased government spending and policy uncertainty can exacerbate reserve depletion,” Gwadebe noted.
Another forex trader, Alhaji Basir Kanjiwa, echoed similar views, stating that while oil prices have improved, actual inflows have not been robust enough to fully offset demand pressures. “There is also the issue of capital outflows as investors remain cautious,” he added.
Despite the decline, Dr Muda Yusuf, founder and CEO of the Centre for the Promotion of Private Enterprise (CPPE), downplayed concerns, describing the drop as modest and not drastic. “We are talking about a drop of less than two percent over the past few weeks. I think we are sitting generally in a fairly comfortable position as far as our reserves are concerned,” he said.
Yusuf noted that some fluctuations are normal and often reflect variables such as debt repayments. “When we have debt maturity to repay some of our external debts, of course, at that point, we expect to see some marginal decline,” he explained, adding that reserves remain above $49 billion after peaking slightly above $50 billion.
The CBN had projected in its 2026 macroeconomic outlook that external reserves would rise to $51.04 billion by the end of the year, supported by stronger oil earnings, foreign exchange market reforms, sustained diaspora remittances, and expanded domestic refining capacity.
However, recent developments, including heightened FX interventions and election-related spending, appear to have slowed the pace of reserve accretion.
The naira has also come under pressure in recent sessions. On Wednesday, March 25, it traded at N1,362 per dollar in the official market, according to CBN data.
Analysts recommend boosting non-oil exports, improving transparency in FX management, and integrating Bureau De Change operators more effectively into the official foreign exchange framework to support reserve stability.
They also stress the need to restore investor confidence, increase oil production, and attract more foreign direct investment to strengthen the country’s external position in the medium to long term.
As Nigeria navigates the election period and global uncertainties, the management of external reserves will remain a critical focus for policymakers and market participants alike.
