Oil Cash, Foreign Inflows Lift Nigeria’s External Reserves by $66m as Naira Hits Two-Year High

Nigeria’s external reserves recorded a modest rebound in January, rising by $66 million as stronger oil prices and renewed foreign inflows provided support to the country’s foreign exchange position. The improvement came alongside a rally in the naira, which closed the month at its strongest level in almost two years, reflecting improved market sentiment and tighter monetary conditions.

Data from the Central Bank of Nigeria (CBN) showed that gross external reserves increased by 1.6 per cent month-on-month to $46.11 billion at the end of January, up from $45.45 billion in December 2025. Analysts attributed the uptick to firmer global crude prices, intermittent portfolio inflows, and proceeds from selected sovereign and corporate external borrowings, reversing part of the pressure seen in previous months.

Global oil prices played a key role in boosting Nigeria’s foreign exchange earnings during the month. Brent crude averaged $69.8 per barrel in January, a 12.7 per cent increase from the previous month, supported by geopolitical tensions in the Middle East, supply-side risks, and OPEC+’s decision to pause planned production increases. As crude oil remains Nigeria’s main export, higher prices typically translate into stronger reserve inflows.

Beyond oil, renewed foreign investor interest in Nigeria’s fixed-income market also supported reserve accumulation. Analysts cited recent adjustments to the foreign exchange framework, tighter monetary policy, and residual effects of strong remittance inflows recorded in December as factors that improved dollar liquidity, even though the precise contribution of each source remains difficult to quantify.

The stronger reserve position coincided with notable gains in the naira. At the official Nigerian Foreign Exchange Market (NFEM), the currency appreciated by 3.5 per cent to close at N1,390.50 per dollar, while the parallel market rate strengthened to N1,460 per dollar. Analysts at Cordros and Afrinvest Research said improved FX transparency, reduced speculative activity, and sustained investor confidence should help keep the naira broadly stable in the near term, despite lingering risks from oil price volatility and global market shifts.

source: The sun