By Uche Usim
Nigeria’s external reserves staged a comeback in May, adding roughly $551 million in the first three weeks of the month.
The accretion signals accentuated some level of stability in the country’s foreign exchange market after weeks of strain.
Latest figures released by the Central Bank of Nigeria show that gross external reserves climbed from $48.34 billion on May 4 to $48.89 billion as of May 21.
The uptick marks a notable reversal from April’s prolonged slide and points to improving external liquidity, as well as a gradual restoration of investor confidence.
The rebound comes on the heels of a turbulent April, when reserves came under sustained pressure from aggressive foreign exchange interventions, external debt servicing obligations, and global market headwinds. During that period, the buffer eroded steadily, underscoring the delicate balance policymakers have had to manage in defending the naira while meeting offshore commitments.
Data from the apex bank illustrate the depth of the April decline. Reserves opened the month at $49.18 billion on April 1 but slipped to $48.94 billion within a week. By April 17, the position had weakened further to $48.63 billion, before closing the month at $48.36 billion. The persistent drop highlighted the intensity of FX demand and the cost of maintaining market stability.
However, May has delivered a sharp turnaround. From $48.34 billion recorded on May 4, reserves have climbed consistently, gaining over half a billion dollars in just 17 days. Analysts say the recovery reflects a combination of improved FX inflows, reduced intervention pressures, and a more balanced market environment.
Speaking after the latest Monetary Policy Committee meeting, CBN Governor, Olayemi Cardoso, emphasised the strategic importance of a strong reserve position in anchoring market sentiment.
“This strong buffer continues to reinforce investor confidence in the Nigerian economy and support exchange rate stability,” Cardoso stated.
The governor had earlier downplayed concerns about fluctuations in reserve levels during a press briefing at the International Monetary Fund Spring Meetings in April, cautioning against overreaction to short-term movements.
“In fact, what concerns me is not so much the decline in reserves, but the reaction to relatively small swings in the numbers, which in today’s market environment should not trigger anxiety,” he said.
Recent trends show that reserve movements have remained sensitive to shifts in capital flows and policy actions.
Earlier in March, reserves fell from above $50.08 billion to $49.61 billion within 11 days, while January recorded a $509 million increase over a similar period, driven by stronger inflows.
Over the past year, Nigeria’s reserve position has been bolstered by a series of foreign exchange reforms introduced under President Bola Ahmed Tinubu’s administration. While volatility persists, the latest rebound suggests the country may be regaining some footing in its quest for FX stability.
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