Nigeria’s external reserves have declined for the first time in six months to put a pause to the steady build-up that had supported currency stability and external buffers through the second half of the year.
The latest data shows a reduction of approximately $263 million, ending a 25-week stretch of uninterrupted gains.
The reversal signals renewed pressure on the country’s foreign exchange position amid persistent dollar demand from importers, debt service obligations, and intervention needs in the currency market.
Market participants say the decline reflects a combination of seasonal outflows and elevated FX demand as businesses position for year-end transactions and early-2026 import requirements. While the pullback is modest relative to the overall reserve stock, analysts view it as a reminder that reserve accumulation remains sensitive to capital flows and oil-related inflows.
The reserve build-up over recent months had helped stabilise the naira and improve investor confidence, particularly as reforms in the FX market encouraged inflows from portfolio investors and exporters.
The latest movement, however, underscores the fragility of that balance if inflows fail to keep pace with demand.
Traders note that sustained reserve drawdowns could increase pressure on the exchange rate if not offset by stronger oil receipts, improved non-oil exports, or renewed capital inflows.
Import cover and external payment capacity are expected to remain adequate in the near term, but continued declines could tighten conditions heading into 2026.
Policy watchers are closely monitoring the response of the Central Bank of Nigeria, which has prioritised exchange-rate stability and market transparency.
Any renewed intervention to smooth volatility would likely depend on the trajectory of reserves and incoming FX flows in the coming weeks.
For now, the first weekly drop in six months serves as an early signal rather than a turning point. The direction of reserves going forward will hinge on oil export performance, foreign investor sentiment, and the pace of FX demand across the economy.