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Naira loses 0.5% despite 13-year high external reserves of $50.45bn - BUSINESSDAY
The naira weakened across segments of the foreign exchange market on Tuesday, even as Nigeria’s external reserves climbed to a 13-year high of $50.45 billion, underscoring the currency’s continued fragility despite stronger external buffers.
The Central Bank of Nigeria (CBN) said gross external reserves rose to $50.45 billion, bolstering confidence in the country’s foreign exchange position and signalling improved liquidity conditions.
Olayemi Cardoso, Governor of the CBN, disclosed this at the end of the 304th Monetary Policy Committee (MPC) meeting in Abuja. He said the current reserve level is sufficient to provide about 9.68 months of import cover, offering a stronger cushion against external shocks.
Cardoso attributed the increase to higher export earnings and improved remittance inflows, which have supported foreign exchange liquidity and strengthened investor confidence. He added that the CBN would release a detailed breakdown of the reserves in the coming days.
“I believe that as long as we are able to continue in this manner, you will see regular accretion to our reserves,” Cardoso said. “Today it is the highest in 13 years. Next time, we hope to say it is the highest in 15 years.”
At the end of December 2025, the apex bank projected that external reserves would rise to $51.04 billion in 2026, based on easing foreign exchange pressures, stronger oil receipts, and sustained inflows from remittances and foreign portfolio investments. The latest figure suggests progress towards that target.
Despite the positive reserves data, the naira depreciated at the official market. CBN data showed the currency weakened by N6.13 to close at N1,355.37 per dollar on Tuesday, representing a 0.5 per cent decline from N1,349.24 recorded on Monday at the Nigerian Foreign Exchange Market (NFEM) window.
In the parallel market, the naira also weakened, closing at N1,400 per dollar compared with N1,358 the previous day — a N42 decline, equivalent to about 3 per cent depreciation.
The exchange rate gap between the official and parallel markets widened, reflecting renewed pressure on the local currency.
The naira has now weakened for five consecutive trading sessions. Market reports attributed the trend partly to the CBN’s cautious moderation of the currency’s recent rally at the official market.
Traders said the apex bank absorbed about $190 million from the market last week, a move interpreted as an effort to manage liquidity and prevent excessive volatility.
Analysts warned that a sustained rally in the naira could prompt foreign portfolio investors in the fixed-income market to take profits, sell investment securities, and repatriate funds, thereby increasing demand for the US dollar.
Meanwhile, Bureau De Change (BDC) operators are yet to commence dollar purchases from deposit money banks, despite the CBN’s directive reopening the Nigerian Foreign Exchange Market window to retail BDCs two weeks ago.
A bank treasurer familiar with the process said implementation had not fully commenced.
“The news about funds being sold to BDCs has not gone operational yet. Transactions are based on requests and compliance with CBN-approved BDC requirements. We process requests strictly based on regulatory compliance,” the treasurer said.
The latest currency movement highlights the delicate balance between building external reserves and maintaining exchange rate stability, as policymakers seek to consolidate recent gains in foreign exchange liquidity while guarding against renewed volatility.
