Naira gains as Nigeria reserves hit 18-year high of $53.3bn

Nigeria's external reserves climbed to an 18-year high of $53.11 billion, lifting the naira N3.39 to N1,343.59 per dollar as improved dollar liquidity steadied the currency across FX markets.

"The current level of the reserves is enough to cover over 10 months of imports. It also provides stability for Naira stability and possibly appreciation," analysts at United Capital Plc said.

The reserves, which stood at $53.11 billion as of Aug. 24, mark a 28.85 percent increase from $41.22 billion a year earlier, according to CBN data. The last time they reached a similar level was Dec. 24, 2008, when they stood at $53.34 billion. Interbank FX turnover jumped 54.66 percent to $235.99 million on Wednesday from $152.59 million on Monday, with the number of deals rising 47.92 percent to 213.

The build-up gives the CBN room to defend the naira and meet external obligations, with net reserves at $40.0 billion in July covering 11.2 months of merchandise imports — well above the conventional three-month adequacy benchmark.

Reserves Build on Oil, Inflows

Quest Merchant Bank Limited said reserves increased $465 million month-on-month to $51.9 billion at the end of July, the third consecutive month of accretion after gains of $1.9 billion and $1.2 billion in June and May. The $6.4 billion gain in the first seven months of 2026 places Nigeria among the strongest reserve accretors across major African economies this year.

The sustained accumulation reflects elevated crude oil prices as Middle East tensions persist, a gradual recovery in Nigeria's crude output to about 1.7 million barrels per day, strong capital inflows supported by the CBN's FX market reforms and a tight monetary policy stance, Quest said. On a gross basis, the reserves provide an estimated 14.5 months of merchandise import cover and 10 months of total import cover, based on balance-of-payments data for the 12 months to December 2025.

The CBN responded to seasonal demand pressures in July with FX sales of about $1.4 billion, up from $320 million the previous month, helping the naira appreciate to N1,368 per dollar during the month. In the parallel market, the naira steadied at N1,405 per dollar on Wednesday, with the gap between official and parallel rates widening to 4.62 percent from 4.38 percent on Monday.

Regional Context and Outlook

Beyond Nigeria, Egypt's net external reserves posted the largest month-on-month increase of $1.2 billion to $56.3 billion, driven by capital inflows and revaluation gains on gold. South Africa's international liquidity position rose $424 million to $71.8 billion.

"We remain constructive on Nigeria's external position, with reserve buffers expected to strengthen further on the back of supportive oil market dynamics, resilient capital inflows, and the credibility of the monetary authorities' policy framework," analysts at Quest Merchant Bank said.

United Capital revised its year-end forecast for reserves to $53.25 billion, enough to cover over 13 months of imports. The last time reserves exceeded $53 billion was in December 2008, before a sustained drawdown that accompanied the oil price collapse and subsequent currency crises — a contrast that shows how the current build-up marks a structural shift in Nigeria's external position.

This article is for informational purposes only and does not constitute investment advice.