Nigeria FX Reserves May Fall to $47bn in 2026 Despite Economic Reforms – Fitch Warns

Nigeria’s foreign exchange reserves are projected to decline to about $47 billion by the end of 2026, according to Fitch Ratings. The agency said the outlook reflects ongoing external pressures even as Nigeria continues to implement economic reforms aimed at stabilising its financial system and strengthening investor confidence.

Fitch affirmed Nigeria’s Long-Term Foreign Currency Issuer Default Rating at ‘B’ with a Stable Outlook. It noted that the country benefits from a large economy, a relatively deep domestic debt market, and recent improvements in monetary and exchange rate management, which have helped support macroeconomic stability.

The ratings agency reported that Nigeria’s gross external reserves have improved significantly in recent months, rising to $49.4 billion by the end of March 2026 from about $32 billion in April 2024. However, it warned that reserves could gradually ease due to fiscal pressures and external vulnerabilities, projecting a drop to $47 billion by end-2026—still equivalent to about seven months of external payments.

Recent reforms by the Central Bank of Nigeria, including exchange rate liberalisation and tighter monetary policy, have helped improve liquidity and make the naira more market-driven. Despite these gains, Fitch cautioned that fiscal challenges, including a widening budget deficit and weak government revenue, could weigh on external stability and put pressure on reserves.

Fitch also highlighted risks to inflation and currency stability, projecting inflation to average around 16 per cent in 2026, while economic growth is expected to remain steady at about 4.1 per cent. While Nigeria’s banking sector shows improvement through ongoing recapitalisation, the agency stressed that governance weaknesses and global economic risks continue to pose challenges to the country’s long-term credit outlook.

source: The Sun