Nigeria’s external reserves hit 4-month high, near $50bn

•Naira defies volatility, gains N2.75 in May

By Chinwendu Obienyi

Nigeria’s foreign exchange reserves strengthened further in May, climbing to $49.26 billion and moving closer to the psychologically significant $50 billion mark, as improved foreign currency inflows and sustained market reforms continued to support the country’s external position.

Latest data show that the country’s gross external reserves increased by $900 million from $48.36 billion recorded at the end of April 2026, representing a 1.86 per cent month-on-month (m/m) growth. The rise in reserves coincided with a marginal appreciation of the naira, which closed May at N1,373.25/$1 compared with N1,376/$1 at the end of April.

The development underscores the resilience of Nigeria’s foreign exchange market and highlights the gains from ongoing reforms aimed at improving liquidity, attracting foreign capital, and restoring investor confidence.

External reserves serve as a critical buffer against external shocks, helping the country meet its international obligations, stabilize the domestic currency, and provide confidence to foreign investors. The steady increase in reserves over recent months is expected to strengthen the Central Bank of Nigeria’s (CBN) ability to support market stability while maintaining adequate foreign currency liquidity.

Experts say the reserve accretion reflects a combination of factors, including stronger oil receipts, increased non-oil foreign exchange inflows, improved remittance channels, and sustained foreign portfolio investment flows into Nigerian financial assets.

The improvement comes at a time when many emerging and frontier economies continue to grapple with external vulnerabilities arising from global economic uncertainty, geopolitical tensions, and fluctuating commodity prices. For Nigeria, building a stronger reserve position is particularly important given the country’s dependence on imported goods and the need to maintain confidence in the foreign exchange market.

In the oil market, Brent crude front-month futures traded largely flat at $93.84 per barrel early on Friday, while U.S. benchmark West Texas Intermediate (WTI) slipped 0.12 per cent to $88.94 per barrel. At the time of writing, Brent crude had declined further by 1.74 per cent to $92.08, while WTI fell 1.52 per cent to $87.55.

The recent decline in oil prices in May follows April’s historic monthly surge, which was driven by severe supply disruptions and pushed average U.S. gasoline prices well above $4 per gallon. Hence, the naira’s relative stability during the month also signals growing equilibrium between demand and supply in the foreign exchange market. While the currency appreciated only marginally by N2.75 against the dollar during May, traders note that the significance lies more in the consistency of exchange rate stability than in the magnitude of the gain.

Chief Economist, SPM Professional, Paul Alaje attributed the development to improving liquidity conditions in the official foreign exchange market, supported by policy measures aimed at enhancing transparency and deepening market activity. Alaje added that these reforms have helped narrow distortions in the market and encouraged greater participation from foreign investors.

“The near-$50 billion reserve level also compares favourably with Nigeria’s recent historical performance. It provides a more robust cushion for the economy at a time when authorities are seeking to consolidate macroeconomic stability, moderate inflationary pressures, and sustain economic growth.

Maintaining the upward trajectory of reserves will depend on several factors, including international crude oil prices, domestic oil production levels, capital inflows, and the continuation of market-friendly policies. Sustained improvements in export earnings and foreign investment inflows could further strengthen Nigeria’s external position in the months ahead”, he explained.

The reserve build-up is likely to be welcomed by investors and businesses that rely on stable access to foreign exchange for trade, investment, and operational activities. It also offers the monetary authorities greater flexibility in managing potential external shocks while supporting confidence in the broader economy.

With reserves now standing at $49.26 billion, attention is turning to whether Nigeria can cross the $50 billion threshold in the coming weeks. If the current pace of accumulation is maintained, the milestone could further reinforce confidence in the country’s foreign exchange market and signal continued progress in rebuilding external buffers.

For now, the combination of rising reserves and a stable naira suggests that Nigeria’s external sector is entering the second half of the year on a stronger footing, providing a measure of optimism for investors, businesses, and policymakers alike.