Nigeria’s Central Bank (CBN) forex reforms have yielded significant results, with the country’s external reserves climbing to $50.45 billion and the naira showing renewed stability across market segments. The measures, launched as part of a broader 2023 adjustment programme, have eased distortions in the foreign exchange market while boosting investor confidence. However, experts warn that the gains remain sensitive to global shocks, volatile capital flows, and domestic inflationary pressures.
Since unifying exchange rates in 2023, the naira initially depreciated sharply, exposing structural weaknesses from years of multiple exchange rate windows and administrative controls. Businesses faced higher input costs, inflation surged, and foreign investors reassessed currency risks. Despite these challenges, the naira recovered steadily, ending February 2026 at N1,368.50/$ in the official market, reflecting gradual improvement from January’s N1,391/$. This recovery has coincided with improved FX liquidity and rising external reserves.
Analysts point to several factors supporting the currency’s resilience, including reduced speculation, the success of CBN’s EFMES since 2024, a lower import bill from growing domestic production, and oil sector stability. Afrinvest, which had projected a 2026 rate of N1,431/$, notes that structural reforms such as fuel subsidy removal and clearance of FX backlogs have strengthened market confidence. Meanwhile, improved domestic refining capacity, including the Dangote refinery’s expansion, is reducing foreign exchange demand for fuel imports, further easing pressure on the naira.
The CBN reports that Nigeria’s gross external reserves now provide 9.68 months of import cover, the highest in 13 years. Net reserves also rose sharply to $34.80 billion at the end of 2025, a 772% increase from 2023 levels. According to CBN Governor Olayemi Cardoso, this improvement demonstrates enhanced transparency, credibility in FX management, and stronger external buffers, boosting both liquidity and macroeconomic stability. Non-oil inflows, such as diaspora transfers, portfolio investments, and FDI, have played a growing role in reserves accumulation alongside oil revenues.
While the reforms have stabilized the naira and strengthened reserves, sustainability remains a key concern. Analysts caution that upcoming election cycles, fiscal pressures, and global market volatility could reverse gains if policy discipline lapses. The challenge for the CBN and the government is now to maintain consistent monetary and fiscal policies, support disciplined FX management, and continue diversifying inflows to safeguard the progress achieved through these reforms.
source: punch