Nigeria’s gross official foreign exchange reserves have reached a six-year high, crossing the $45 billion mark, providing a strong buffer as the country heads into 2026. FBNQuest Merchant Bank highlighted that reserves rose by $3.8 billion in the first 11 months of 2025 and surged $7.5 billion since hitting their June low, signaling a resilient position despite ongoing FX pressures and year-end demand.
The November increase of $1.5 billion was largely driven by the Federal Government’s $2.4 billion Eurobond issuance, alongside steady inflows from oil exports and remittances. Part of the Eurobond proceeds was used to refinance a $1.2 billion maturing Eurobond, ensuring continuity in the country’s debt obligations. FBNQuest attributed the improved reserve position to greater transparency in the FX market and ongoing reforms by the Central Bank of Nigeria (CBN).
Despite the record reserves, the naira weakened by 1.8% month-on-month in November, largely due to seasonal travel demand and import settlements. Analysts expect these pressures to ease as market reforms improve efficiency and stabilize supply conditions. FBNQuest forecasts that reserves will remain broadly stable, supported by stronger transparency and continued CBN reform measures.
Amid these developments, Fitch Ratings has advised the CBN to adopt a cautious approach to monetary easing. While declining inflation across Sub-Saharan Africa may allow for interest rate cuts, Fitch warns that excessive liquidity could pose risks. In its ‘Sub-Saharan Africa Sovereigns Outlook 2026’ report, the agency emphasized that careful management of rate cuts is essential to sustain the gains in reserves and maintain macroeconomic stability.
Fitch also noted the potential impact of regional and domestic political events. Elections in Nigeria in early 2027 and other Sub-Saharan countries in 2026 could influence economic policy continuity and fiscal measures. The agency expects key reforms in Nigeria to continue but cautions that managing liquidity without triggering inflation will remain a critical challenge for the CBN.
source: The Sun