Nigeria’s Foreign Reserves Drop by $850 Million Amid Election Spending and FX Pressures
Nigeria’s foreign reserves have declined by about $850 million within three weeks, raising fresh concerns among forex traders and market watchers about mounting economic pressures. Data from the Central Bank of Nigeria (CBN) shows reserves fell from $50.03 billion on March 11, 2026, to $49.18 billion by April 1, reversing a steady nine-month growth trend recorded since July 2025.
Market participants attribute the drop largely to increased government spending tied to the election cycle, alongside sustained foreign exchange interventions by the CBN aimed at stabilising the naira. Each time the apex bank injects dollars into the market to support the currency, it draws directly from external reserves, gradually weakening the buffer.
Traders also point to capital flow volatility as a key factor, with foreign portfolio investors either pulling funds out or becoming more cautious due to global interest rate movements. According to Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), foreign debt repayments and policy uncertainty typical of election periods are also contributing to the pressure on reserves.
Despite improved global oil prices, analysts say inflows have not been strong enough to offset rising demand for foreign exchange. Nigeria’s heavy reliance on oil exports and high import dependence—especially for fuel, industrial goods, and pharmaceuticals—continue to expose the country’s reserves to fluctuations. Experts are calling for stronger non-oil exports, improved FX transparency, and better integration of Bureau De Change operators into the system.
However, some economists urge calm. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Public Enterprise (CPPE), noted that the decline represents less than a two percent drop and should not trigger alarm. He explained that such fluctuations are normal, especially when external debt obligations are settled, adding that Nigeria’s reserves remain relatively strong above $49 billion, providing a comfortable cushion for the economy.
source: nairametrics