Nigeria’s External Buffer Hits New Heights: FX Reserves Add $4.39bn in One Year

Nigeria’s financial landscape is undergoing a significant transformation as the latest data from the Central Bank of Nigeria (CBN) reveals that the country’s foreign exchange (FX) reserves have grown by $4.39 billion over the past year. This impressive surge brings the total reserves to approximately $45.04 billion as of December 2025, the highest level recorded in nearly six years. This milestone is not just a statistical victory; it represents a strengthening of Nigeria’s economic “war chest,” providing a vital cushion against global volatility and enhancing the central bank’s ability to manage the Naira.

​The Road to $45 Billion: What Drove the Growth?

​The growth in reserves is the result of a deliberate “10-point reform agenda” led by CBN Governor Olayemi Cardoso. Unlike previous years where reserves were often depleted to defend the currency, the 2025 buildup has been fueled by a combination of market-driven policies and improved revenue streams.

​Key drivers behind this $4.39 billion accretion include:

  • Improved Crude Oil Production: Increased security in the Niger Delta and higher production quotas have allowed Nigeria to take advantage of favorable global oil prices.
  • Foreign Portfolio Inflows (FPIs): High treasury yields and strategic Open Market Operations (OMO) have attracted significant foreign investment into the Nigerian debt market.
  • Eurobond & Multilateral Support: Strategic borrowing and support from the World Bank and IMF have boosted headline figures.
  • Reduced Import Pressure: The full operation of the Dangote Refinery has significantly cut the foreign exchange demand previously spent on refined petroleum imports.

​Impact on the Naira and Market Confidence

​The direct benefit of a higher reserve position is market confidence. For foreign investors, a 45 billion reserve signals that Nigeria has the liquidity to honor its international obligations and defend the currency if necessary. This has helped stabilize the exchange rate, which hovered around **₦1,443/** in December 2025, a marked improvement from the extreme volatility seen in previous quarters.

​Furthermore, the “Zero Waiting Time” policy for verified FX obligations has cleared the backlog that once plagued the system. With a robust buffer, the CBN can now ensure that manufacturers and legitimate businesses have predictable access to the dollars they need for production.

​Challenges and the Future Outlook

​While the $4.39 billion growth is a triumph, stakeholders warn that the work is not finished. Inflation, though easing after the November rebasing, remains a concern for the average citizen. Economists suggest that to sustain this momentum, Nigeria must:

  1. Diversify Beyond Oil: Increase non-oil exports to ensure reserves aren’t solely dependent on fluctuating energy prices.
  2. Maintain Fiscal Discipline: Ensure that the government’s expenditure remains within budget to avoid putting pressure on the central bank.
  3. Encourage FDI: Shift from “hot money” (short-term portfolio investments) to long-term Foreign Direct Investment (FDI) in manufacturing and infrastructure.

Summary:

Nigeria’s external reserves reached a six-year high of $45.04 billion in December 2025, adding $4.39 billion in a single year through improved oil output, CBN reforms, and reduced fuel import costs.

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