Nigeria’s external reserves climbed to a fresh high in May, supported by stronger crude oil earnings, sustained foreign portfolio inflows and rising remittances. The increase gives the Central Bank of Nigeria (CBN) more firepower to defend the naira against mounting global uncertainties.
Data published on the CBN website showed that reserves rose by $930 million to $49.25 billion as of May 25, 2026. This recovery follows a recent decline to $48.32 billion recorded on May 7, marking one of the strongest reserve accretions in recent months. The latest increase comes as elevated crude oil prices, driven by tensions in the Middle East, continue to improve Nigeria’s external earnings position despite heightened global risk aversion and volatility across emerging markets.
Interbank liquidity stabilises naira amidst global market volatility
The naira traded largely flat against the dollar across the foreign exchange market segments on Tuesday, as increased interbank transactions supported liquidity amid rising external reserves. Ayodele Akinwunmi, United Capital chief economist, said the reserve build-up would help sustain exchange rate stability and support investor appetite for naira assets.
“This development is positive, as it will help sustain currency stability or drive naira appreciation while encouraging naira-denominated investments,” Akinwunmi said.
He noted that higher crude oil prices, increased oil production and improved non-oil export performance were the major drivers behind the reserve accretion.
Remittances and foreign portfolio inflows reinforce external buffers
Ayokunle Olubunmi, Agusto & Co head of financial institutions ratings, said the surge in oil prices linked to the ongoing Middle East conflict remained the primary factor supporting reserves. He added that elevated remittances and foreign portfolio investments (FPI) have also been supportive.
During the Monetary Policy Committee briefing last week, Olayemi Cardoso, CBN governor, said gross external reserves stood at $49.49 billion as of May 15, compared with $48.35 billion at the end of March. According to Cardoso, the reserve level was sufficient to cover 9.04 months of imports of goods and services, reinforcing investor confidence in the economy and supporting exchange rate stability.
Central bank targets $1bn monthly diaspora inflows to anchor foreign exchange reforms
The reserve gains also coincide with renewed efforts by the apex bank to deepen diaspora remittances as a stable source of foreign exchange inflows. Cardoso said the CBN was targeting monthly remittance inflows of $1 billion by the end of the year, up from the current average of about $600 million per month.
Data from the World Bank showed that personal remittances to Nigeria reached $21.29 billion in 2024, maintaining the country’s position as one of the largest recipients of diaspora inflows in Sub-Saharan Africa. To attract more diaspora funds into the banking system, the CBN has introduced measures aimed at formalising remittance channels, including the Non-Resident Nigerian Ordinary Account, the Non-Resident Nigerian Investment Account and remote Bank Verification Number enrollment platforms.
Global oil price resilience buffers domestic economy against shocks
Analysts said the stronger reserve position gives the CBN greater room to sustain foreign exchange reforms and cushion the economy against external shocks, especially as uncertainty persists in global oil markets. Crude prices briefly weakened earlier this week on reports of a possible U.S.-Iran deal, with Brent falling below $100 a barrel before rebounding after President Donald Trump said there was no urgency to conclude an agreement and that restrictions around the Strait of Hormuz would remain in place.
Quest Merchant Bank analysts said Nigeria’s reserves were likely to remain resilient despite growing global uncertainties. “We expect Nigeria’s external buffers to remain resilient, supported by higher oil proceeds and moderating FX demand, despite elevated global risk aversion,” the analysts said.
Across Africa, external positions also improved moderately.
South Africa’s international liquidity position rose by $570 million to $73.8 billion, while Egypt’s net external reserves increased by $179 million month-on-month to $53 billion, supported by continued capital inflows amid elevated interest rates.